If you fall behind and do not make timely payments on your federal student loans it will result in wage garnishment. The federal government can take up to 15 percent of every paycheck you receive to satisfy your debt. For a borrower that makes $2,000 a month, the garnishment amount will be $300 per month. What many borrowers do not know is that the US Department of Education can also withhold federal benefits like tax returns and Social Security payments. Defaulting will negatively impact your credit rating as well. All in all, defaulting on your student loans and the resulting garnishment has multiple implications and none are good.

The harsh reality is that wage garnishment is an effective tool for the government to recover unpaid loans. They utilize private collection agencies and in 2018 garnishment produced over $841.6 million in recovered loan payments.

If you are struggling to make your federal student loan payments, there are options that you should understand.

Avoid Garnishment Before It Starts  

Far and away, the best approach is to take action at the time you begin to struggle to make your monthly payments in full and on time. The best option is to contact a subject matter expert to work as your advocate and manage the process of reviewing the federal student loan repayment programs that the US Department of Education (DOE) makes available. Administering the enrollment in these programs is challenging and it is important to get it right to avoid complications and garnishment. There are income-based plans that can dramatically reduce your monthly payment. That is precisely what we have been doing for thousands of borrowers over eight years at Higher Level Processing.

You have a short window to consolidate your federal loans (combining them into a single loan with its own interest rate) before the Education Department, via a private collection agency, begins to garnish your wages.

If you do not explore the DOE repayment programs and default on your loans your wages can be garnished, and you will not be eligible to enroll in a DOE repayment program until your loans are returned to good standing. This is achieved through a process called loan rehabilitation.

Rehabilitate Your Loans

To be in good standing, move out of default and stop wage garnishment you will need to rehabilitate your loan status. This process takes some time and you need to understand the details well before you start. Once you complete the rehabilitation process you will again have the option to enroll in a DOE repayment program that works best for you, including different income-based options that could drop your monthly payment as low as $0.

Federal Student Loan Forgiveness & Repayment
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