Student loan wage garnishment is when student loan servicers collect a portion of your paycheck to pay down a defaulted student loan — up to 25 percent of your disposable pay, depending on the type of loan. Wage garnishment can happen if you’ve missed several student loan payments, and it may continue until your loan is paid in full or the default status is resolved.

If you’re in danger of falling behind on your student loans, here’s what to know and how to prepare.

What is student loan wage garnishment?

Wage garnishment takes place when a loan holder orders your employer to withhold a percentage of your pay to repay past-due student loan balances. For federal loans, you must have missed nine months of payments before the government can garnish your wages, although this may vary for private loans.

Garnishment is used to try to get student loans paid back. With federal student loans, wage garnishment can take place without your servicer taking you to court. However, most states require loan holders to obtain a court order to garnish your wages if you default on private student loans.

With federal student loans, wage garnishment can continue until your loan balances plus interest and fees are paid back, but it can also end if your loan is removed from default. The U.S. Department of Education has stalled wage garnishment on all defaulted federal loans through the payment pause, which is currently set to expire no later than 60 days after June 30, 2023. Plus, all federal loans will be returned to good standing status once payments resume.

How much can be garnished for student loans?

Generally, loan holders can garnish up to 15 percent of your disposable pay to repay federal student loans and up to 25 percent to repay private student loans.

These are aggregate limits. That is, if you default on multiple loans held by multiple companies, the garnishments they place on your income cannot add up to more than the limit.

However, these limits can vary by state.

How to stop student loan wage garnishment

You have rights around wage garnishment when it comes to federal student loans. For example, you have the right to be sent a notice from the U.S. Department of Education that explains its plans to garnish your wages in 30 days, as well as the information regarding your debts. You also have the right to see records relating to your student loan debt.

Additionally, there are plenty of steps you can take to avoid wage garnishment on defaulted student loans.

Enter into a voluntary repayment agreement

To avoid wage garnishment relating to federal student loans, you can negotiate repayment terms with the U.S. Department of Education or the collection agency assigned to your account. For this to work, however, you have to ensure that your first payment is made no later than 30 days from the day the wage garnishment notice was sent.

Entering into a voluntary repayment agreement is the first step you should take to get back on track and to eventually get your federal student loans out of default. Eventually, though, you could also consider loan rehabilitation or loan consolidation.

With loan rehabilitation, you are asked to sign an agreement to make nine on-time monthly payments based on your income over a period of 10 consecutive months.

To consolidate defaulted federal student loans, you must either sign up for a new income-driven repayment plan or make three consecutive, on-time, full monthly payments on the defaulted loan.

Private lenders may also be willing to negotiate a repayment agreement or a loan settlement. Contact your lender for more information, as the requirements and availability will vary from lender to lender.

Object to garnishment and request a hearing

With federal student loans, you may also decide to object to wage garnishment and ask for an official hearing. This could be your best option if you do not agree about owing the student loan debt you’re being asked to pay, if you disagree with the amount or if you believe you weren’t properly notified about the garnishment.

You may also ask for a hearing if you believe that wage garnishment could create an extreme financial hardship in your life, or if you have been employed for less than 12 months after losing a previous job.

In any case, you must make a request for a hearing in writing and ensure that it is postmarked no later than 30 days from the date the wage garnishment notification was sent. You also have to provide proof to support your objections to the debt or the garnishment and pay for your own legal representation for an in-person hearing. Many organizations offer help navigating this system, either free or for a fee.

If your hearing is successful, either your wages won’t be garnished for a 12-month period or you may qualify for a partial (reduced) garnishment. If your hearing is unsuccessful, your wages will be garnished at 15 percent of your disposable income.

Tips for avoiding student loan default

Student loan default can quickly become a costly mess, and that’s especially true once a collection agency gets involved. As a result, your best bet is avoiding default at all costs if you can.

If you’re worried about the future repayment of your student loans, here are some tips that can help:

  • Look into deferment and forbearance. While federal student loans don’t require any payments until mid-2023, thanks to the coronavirus forbearance period, you may be able to apply for additional deferment or forbearance options after that date. The federal government has several of these options available, and you can learn what options you have on your private loans by reaching out to your lender.
  • Switch repayment plans to get a lower monthly payment. Several repayment plans are available for federal student loans, including extended repayment plans that can last up to 30 years. You may be able to get a lower monthly payment if you opt for a longer repayment term.
  • Switch to an income-driven repayment plan. Income-driven repayment plans let you pay a percentage of your discretionary income toward federal loans for 20 to 25 years, at which point the remaining loan balances are forgiven. Considering your monthly payment could be as low as $0 on these plans, they can be a good option for borrowers with low incomes who are struggling to repay their loans.
  • Refinance your student loans. Consider refinancing your student loans to get a lower interest rate, a lower monthly payment or both. Just remember that refinancing federal loans with a private lender means giving up federal protections like deferment, forbearance and access to income-driven repayment plans.