Student Loan Wage Garnishment: All You Need to Know

Rebecca SafierUpdated August 6, 2023

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Defaulting on student loans can have a host of negative consequences, with one of the worst being garnishment of your wages. This means your employer must withhold some of your earnings to repay your debt. If you don’t pay your federal student loans for over nine months, the government can garnish up to 15% of your disposable pay. A private lender can also garnish your wages over a private student loan, but it will need to bring you to court and get a judgment first. Let’s take a closer look at student loan wage garnishment, including:

How much can be garnished for student loans?
How can you stop student loan wage garnishment?
How can you rehabilitate your loan?

What Is Student Loan Wage Garnishment?

Student loan wage garnishment is when a lender orders your employer to withhold a certain percentage of your paycheck every month to pay back a past-due loan. You’ll receive a smaller paycheck, since a portion of it will go directly toward paying back your student loan. If you’re in good standing on your student loans, you don’t have to worry about wage garnishment. But if you’ve missed payments for more than nine months on your federal student loans, they go into default. Once you’re in default, the answer to “Can my wages be garnished for student loans?” is definitely yes. At this point, the government can authorize a collections agency to garnish your wages. Note that the government also has the power to garnish your tax refund or Social Security benefits over defaulted student loans. Wage garnishments, however, have been paused since March of 2020 in response to the Covid-19 pandemic. Throughout this student loan moratorium, lenders couldn't garnish your wages over defaulted federal student loans.Student loan interest will resume starting on Sept. 1, 2023, and payments will be due starting in October. In terms of private vs. federal student loans, private lenders can also pursue wage garnishment, but they must bring you to court and get a judgment first. Private student loans, unlike federal loans, also have a statute of limitations, a period of time after which a collections agency can no longer legally demand repayment. The statute of limitations varies from state to state, ranging from three to 20 years. A common period is six years.Recommended: Advantages of Refinancing Student Loans

How Much Can Be Garnished for Student Loans?

The government can garnish up to 15% of your disposable pay to repay your federal student loans. This garnishment can continue until your loan has been paid back in full or you’ve gotten your loan out of default.The amount of wage garnishment for private student loans varies by state, but it typically maxes out at 25% of your pay. State laws also dictate how a lender or collections agency must proceed when bringing you to court. Recommended: What Is Student Loan Refinancing?

How to Stop Student Loan Wage Garnishment

To stop a student loan wage garnishment, you’ll have to get your loan out of default or prove that the garnishment is unfair. Here are a few steps you can take.

Set Up a Voluntary Repayment Agreement

If your wages are going to be garnished, you should receive a warning 30 days in advance. To prevent garnishment, you can contact the collection agency and try to come to a repayment agreement. To revive federal student loans, your repayment agreement will likely take the form of rehabilitation or consolidation (more on this below). If you and the collections agency agree to terms, you must make your payment within this 30-day window to prevent wage garnishment. If you’re dealing with defaulted private student loans, it could also be worth trying to negotiate with the collections agency for a repayment agreement or lump-sum settlement.

Make an Objection and Ask for a Hearing

If you believe the wage garnishment is unfair or would cause extreme financial hardship for you, you can try objecting to it and requesting an official hearing. As with negotiating a repayment agreement, you’ll likely need to make this request within 30 days of receiving notice of the wage garnishment to stop it from happening.You must make this request in writing and provide proof of your objections to the debt. If you’re summoned to an in-person hearing, you might have to hire a lawyer to represent you. The outcomes of this approach can vary. You may be able to postpone the wage garnishment, reduce the amount, or stop it completely. If you lose, however, it will likely proceed as planned.

Rehabilitate Your Loan

You can also stop your wages from being garnished by getting your student loans out of default. You have two options for federal student loans: rehabilitation and consolidation. With rehabilitation, you agree to make nine reasonable monthly payments within 20 days of the payment due date and within a period of 10 consecutive months. Your payment amount is typically 15% of your annual discretionary income divided by 12. After you rehabilitate your loans, the default will be removed from your credit report. Note that you can only use loan rehabilitation once. Recommended: Can You Refinance Federal Student Loans?

Consolidate Your Loan

Your other option for getting loans out of default and stopping a wage garnishment is Direct loan consolidation. Under loan consolidation, you agree to make three consecutive, full monthly payments on your loans and pay them back on an income-driven repayment plan. Consolidation can get your student loan out of default faster than rehabilitation, but your initial monthly payments might be higher. Plus, consolidation does not remove the default from your credit report. Recommended: What Is Need-Based Financial Aid?

The Takeaway

The best way to prevent wage garnishment is to avoid student loan default in the first place. As mentioned, you have nine months to get a federal student loan back into good standing before it goes into default. If you’re worried about missing payments (or already have), contact your loan servicer about your options. For federal student loans, you might apply for an income-driven repayment plan or pause payments through forbearance or deferment. Some private lenders might also be willing to negotiate so you don’t default on your debt. If you’re struggling to pay back your debt due to high interest rates, you could also consider refinancing student loans for lower rates. Be cautious about refinancing federal loans with a private lender, though, as doing so means you’ll lose access to student loan forgiveness, consolidation, and other federal protections. If you’re interested in refinancing, Lantern can help you quickly and conveniently find an array of student loan refinance offers. Could student loan refinancing be a smart next step? Let Lantern help.

Frequently Asked Questions

Are students protected from student loan wage garnishment?

What happens if you never pay your student loans?

What is student loan rehabilitation?

iStock/Makhbubakhon Ismatova

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About the Author

Rebecca Safier

Rebecca Safier has nearly a decade of experience writing about personal finance. Formerly a senior writer with LendingTree and Student Loan Hero, she specializes in student loans, financial aid, and personal loans. She is certified as a student loan counselor with the National Association of Certified Credit Counselors (NACCC).

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