Since the pandemic, wage garnishment for federal student loan debt has been off the table — but the practice is soon expected to restart(Image credit: MementoJpeg / Getty Images)When you do not make payments on your student loan debt for long enough, your loan servicer may take another route to get back the money you owe. One of these avenues is seizing your wages, also known as wage garnishment.Since the pandemic, wage garnishment for federal student loan debt has been off the table, offering borrowers some protection. Soon, however, the practice is expected to restart. “In a new U.S. Department of Education memo obtained by CNBC,” it was revealed that “garnishments may resume — in some cases, as early as this summer,” said CNBC. This will mean that for “the first time in roughly five years, borrowers who have defaulted on their federal student loan debt will face collection activity, including the garnishment of their wages.”What happens with student loan wage garnishment?Student loan wage garnishment involves a “private lender or the federal government withholding part of your income to repay overdue student loan debt,” said Bankrate. How and when this can happen — as well as how much of your paycheck can be withheld — varies depending on whether it is a private lender or the federal government.Subscribe to The WeekEscape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
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Sign up for The Week’s Free NewslettersFrom our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.Federal student loan wage garnishment: You will need to have “missed nine months of payments for federal loans before the government can garnish your wages,” said Bankrate. “Your servicer does not need to take you to court to begin garnishing,” and they can garnish “up to 15% of your disposable income to repay federal student loans.” The practice can continue “until your loan balances plus interest and fees are paid back,” or “if your loan is removed from default.”Private student loan wage garnishment: Private student loans can enter default much sooner, “after just one missed payment,” but your lender “first must sue you and win a court judgment” before they can garnish your wages, said Experian. How much they are allowed to garnish “depends on the state where you live,” but it could be up to “25% of your disposable income” in “some states,” said Investopedia.What can you do to avoid student loan wage garnishment?If you have had trouble staying on top of your student loan payments and are concerned about the prospect of wage garnishment, there are steps you can take. The most straightforward is to “make consistent, timely payments,” ensuring you remember deadlines by “setting up automatic payments or reminders,” said LendingTr
