Student loans have helped millions of low- and middle-income students earn a college degree. Student loans, particularly those issued or guaranteed by the federal government, require recipients to begin paying back the debt six months after graduating or leaving school. Although the U.S. Department of Education offers several mechanisms for avoiding default, if a borrower is unable or unwilling to pay back the loan, the federal government can garnish wages to help pay down the debt.
Loan Terms
Student loans issued or guaranteed by the government generally require a student to remain carry at least half-time course loads. When the student graduates or leaves school, loan repayment begins six months after the last enrollment. Although borrowers can successfully petition for forbearance while they seek a job, the borrower is required to pay back the loan with interest.
Garnishment
The Department of Education can seize up to 15 percent of a person's disposable wages to offset defaulted student debt. Because no statute of limitations exists on student loan debt, garnishment can continue until the entire balance is paid in full.
Garnishment Procedure
Student loan garnishments do not require the normal process of a judicial hearing and court order. Instead, the federal government can issue an Order for Withholding of Wages directly to the borrower's employer. In general, the Department of Education provides ample warning of a pending garnishment, including a 30-day notice, directly to the defaulted borrower.
Loan Rehabilitation
Borrowers in default might have the default removed from their credit report if they follow a rehabilitation process. This process requires the borrower to make nine on-time payments during a 10-month period. Any payments made through wage garnishment will not count toward rehabilitation. Once the loan has been rehabilitated, borrowers can incur additional loans if they are eligible.
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