Student Loan Garnishment Guide: What It Is, How It Works, and How to Stop It

Student loan garnishment allows lenders to deduct a portion of your wages to repay defaulted student loans. Federal lenders can garnish wages after 270 days of nonpayment without court orders, while private lenders require court judgments after 90 days.

Garnishment can impact your financial stability, but there are options to stop it, like setting up a repayment plan via loan rehabilitation or consolidation. Understanding garnishment types and your rights can help you prevent or stop it. Here’s everything to know if you face this situation.

Table of Contents Skip to Section

What is student loan garnishment?
How does student loan garnishment work?
Types of student loan garnishment
How to stop student loan wage garnishment
How to prevent future garnishments
FAQ

What is student loan garnishment?

Student loan garnishment is when a portion of your wages is deducted from your paycheck and sent to the lender to pay off your student loan debt. Both federal and private student loan lenders can garnish your wages, though the time and process differ.

Wages can only be garnished after you default on your student loans. On federal student loans, default occurs after 270 days without payment. Private lenders give you less time, with default typically occurring after just 90 days. However, default timing does vary by lender, so check to see what terms apply.

Once you’ve defaulted on your loans, the federal government can begin garnishing your wages without a court order. Private lenders don’t have this access; they must first sue you and get a judgment before garnishing your wages.

How does student loan garnishment work?

Understanding how wage garnishment works can help you better navigate the situation if you fall behind on student loan payments. Let’s walk through the process and find out how much of your wages may be affected.

Wage garnishment process

Federal student loan wage garnishment follows a specific process; here’s a step-by-step breakdown so you know exactly what to expect:

1. Loan default

The process begins when your loan defaults after 270 days of nonpayment. At this time, the Department of Education may transfer your loan over to a collection agency to recover the debt.

2. Notice sent

Soon after, you’ll receive a “Notice of Intent to Garnish” that provides information on your loan, how much will be garnished, when garnishment will begin, and your rights as a borrower. This notice will arrive at least 30 days before garnishments start.

3. Opportunity to challenge the garnishment

As a borrower, you do have certain rights, including the right to object to the garnishment before it’s put into effect. But you can’t object for just any reason; you must meet certain conditions, such as:

You weren’t properly notified about the garnishment
The loan amount and term are incorrect
The debt was already paid or forgiven
You didn’t actually default on the loan
Garnishment would cause extreme financial hardship
You’ve been employed less than 12 months after losing a prior job

4. Employer notification

If you choose not to challenge the garnishment, the Department of Education or its collection agency will then send your employer a garnishment order with your name, garnishment amount, and length of garnishment, plus additional details and instructions.

5. Garnishment begins

Your employer is legally required to comply with the garnishment order. The designated amount will be deducted automatically from your net pay and sent directly to the lender or collection agency; this usually starts within one or two pay periods after your employer receives the order.

This process is slightly different if your loans are held by a private lender. A private lender will not be able to automatically garnish your wage without a court order; they need to sue you first and win a judgment before garnishment can begin.

How much of your wages can be garnished?

The maximum wage garnishment for federal student loans is typically 15% of your disposable income.

Disposable income is defined as your net wages after required deductions—like Social Security and Medicare plus federal, state, and local income taxes—have been taken out. Additional deductions like retirement contributions and health insurance premiums aren’t considered.

Let’s look at an example to illustrate:

If you earn $1,000 per weekly paycheck after taxes, the maximum amount of garnishment would be $150 per paycheck ($1,000 x .15 = $150).

The maximum wage garnishment for private student loans varies by state but can reach up to 25% of your disposable income. Here’s an example:

A person earning $1,000 per weekly paycheck could have up to $250 garnished, leaving you with $750 per week ($2,000 x .25 = $250).

To protect low-income earners, a law states that lenders must leave borrowers with disposable income equal to 30 times the federal minimum wage each week. The current minimum wage is $7.25, which means you must be left with at least $217.50 per week ($7.25 x 30 = $217.50).

Here’s how this would work:

If a person earns $250 per week, the lender couldn’t legally garnish the full 25% of their wages ($250 x .25 = $62.50) because it would leave the borrower with only $187.50 per week to live on ($250 – $62.50 = $187.50).
The lender could only take any amount above $217.50, however, so the amount of wages garnished each week would be $32.50 ($250 – $217.50 = $32.50).

If your income is less than $217.50 per week, the lender cannot legally garnish your wages; you are considered exempt from garnishment.

Types of student loan garnishment

There are different types of garnishment used to recover unpaid student loans, each with its own rules and processes. Let’s look at each type and how they work.

Wage garnishment for federal student loans

With more than 92% of all student loans funded through the federal government, most borrowers facing wage garnishment will go through Administrative Wage Garnishment (AWG).

Administrative Wage Garnishment (AWG) is the process the federal government uses to collect on defaulted federal student loans. Once your loan is in default (typically after 270 days of nonpayment), AWG allows the government to garnish wages without getting a court order.

AWG applies to the majority of federal student loans including:

Of course, garnishment won’t happen as soon as you default; you’ll first receive a written notice alerting you to the upcoming garnishment at least 30 days in advance. You can challenge the garnishment in a hearing if you think it has been done in error or it would cause extreme financial hardship.

If the garnishment moves forward, AWS allows the Department of Education or its collection agency to contact your employer and require them to garnish up to 15% of your disposable income. This amount is sent directly to the government to satisfy your debt.

In addition to garnishing your salary, the government can also take a percentage of:

Severance pay
Worker’s compensation
Insurance settlements

Garnishments will continue until the loan has been paid off or you set up a rehabilitation agreement or enroll in a new repayment plan.

Wage garnishment for private student loans

Wage garnishment on private student loans works differently than for federal loans. To begin with, default is triggered more quickly on private student loans; though it varies by lender, the average time is just 90 days of nonpayment—six months sooner than with federal student loans.

There’s also no automatic process for private lenders to garnish your wages; they must first file a lawsuit against you. The lender will send you a notice letting you know a suit has been filed. You then can defend yourself and contest the lawsuit if it’s invalid.

If you fail to respond to the suit, the court will likely issue a default judgment ruling in the lender’s favor. As part of this judgment, you may also be required to pay more than just the principal balance, including:

Late fees
Interest
Court costs
Attorney’s fees
Collection fees

Once a judgment has been made, the lender can request a wage garnishment order from the court, which will likely be granted; this authorizes the lender to take up to 25% of your disposable income and continue garnishing your wages until the debt is paid in full.

Tax return garnishment for student loans

The government can also collect on your defaulted student loan by garnishing your tax refund. This is done through the Treasury Offset Program (TOP). Keep in mind this program only covers federal student loans, not private loans.

Through the TOP, the Department of Education can refer your student loan debt to the Treasury Department after 270 days of nonpayment. If the Treasury Department decides to act, you’ll receive a “Notice of Intent to Offset,” letting you know your tax return will be intercepted at least 65 days in advance.

When you file your taxes, any federal return you’re owed will be used to pay down your student loan debt. Your state tax refund may also be at risk, depending on the laws in your state. Tax refund garnishment may continue every year until your debt is satisfied.

Social Security garnishment for student loans

The Treasury Offset Program also allows the government to garnish your Social Security benefits (retirement and disability) to pay for a defaulted federal student loan. (Note: Private lenders cannot garnish social security benefits; this section only applies to federal student loans.)

Before your benefits are garnished, you should receive a notice detailing the amount owed, how much will be garnished, and how to challenge the garnishment. The most the government can garnish is 15% of your benefits. The garnishment will typically continue until the debt is paid.

How to stop student loan wage garnishment

If you’re facing student loan wage garnishment, several ways exist to stop or reduce the amount taken from your paycheck. Here are some options you can explore.

Action	Best for
Contact your loan servicer	Getting immediate assistance and guidance on options; this should be the first step for most borrowers
Set up a repayment plan	Borrowers who can commit to consistent payments
Request a hearing	Those facing federal garnishment who believe they have grounds to reduce or stop garnishment (e.g., financial hardship or incorrect loan info)
File for bankruptcy	Borrowers with overwhelming debt and limited options
Use legal aid and counseling	If you need support navigating garnishment options, understanding rights, or restructuring debt through expert assistance.

Contact your loan servicer

The best option to stop wage garnishment is to talk directly with the company that services your student loan. Try to do this as quickly as possible; the sooner you talk to your student loan servicing company, the more options you’ll have.

While you can contact your loan servicer by email, your best bet is to call their customer service line and speak directly with a representative. Be sure to have important information on hand like your account number, loan amounts, and any notices you’ve received about the garnishment.

Ask the loan servicer representative what you can do to stop the wage garnishment. They can talk you through the various options like loan rehabilitation, consolidation, or income-based repayment.

If you agree, the loan servicer will contact your employer and cancel the wage garnishment. Keep in mind that this process may take some time, which is why it’s vital to take action as soon as you’re notified about an impending garnishment.

Set up a repayment plan

Working with your lender or loan servicer to set up a repayment plan can also keep your wages from being garnished.

Private student loans

For private loans, the process is relatively straightforward; you simply need to contact your lender and negotiate a payment plan that works for you both.

If you’re unable to come to an agreement with your private lender, student loan consolidation may be an option; this allows you to roll all of your student loans into one loan to simplify repayment. By consolidating your loans, you may also find better interest rates and longer repayment terms, which will reduce monthly payments.

But keep in mind that having defaulted student loans in your credit history could make it difficult to secure a new loan; you may need to find a cosigner to help you qualify for the consolidation loan.

Federal student loans

For federal loans that are in default, the process is a bit more complicated. Before setting up a repayment plan, you’ll likely need to rehabilitate your student loan. Loan rehabilitation requires you to make nine on-time payments within a 10-month period to bring your account out of default and back into good standing.

These payments are usually set at 15% of your discretionary income, which is the difference between your yearly income and 150% of the poverty guideline for your location and family size.

Once you’ve successfully rehabilitated your federal student loans, you’ll be eligible for options like income-driven repayment plans (IDR). These plans base your monthly payment on how much you earn, making them affordable for most borrowers. There are several different plans to choose from including:

There’s also The Saving on a Valuable Education (SAVE) plan, but it has been temporarily blocked by a federal court injunction.

Request a hearing

After you’ve defaulted on your federal student loans and received a Notice of Intent to Garnish, you have the right to challenge the garnishment through a hearing. This allows you to argue your case and present evidence as to why the garnishment should be halted or reduced.

To request a hearing, you must submit a written request to the loan servicer within 30 days of receiving your notice. You can’t object to a wage garnishment for any reason–it must be because:

The loan is not in default
The loan amount was not reported correctly
The debt has been paid or forgiven
There was improper notification or a procedural error
Garnishment would cause extreme financial hardship
You’ve been employed less than 12 months after losing your previous job

Based on the documentation presented, the hearing may be held in person, over the phone, or on paper. If it takes place in person, you’ll be responsible for getting to the hearing, which will be held at one of the three regional offices in Atlanta, San Francisco, or Chicago.

A ruling isn’t made immediately; you’ll usually receive word of a decision within 60 days of the hearing. Your wage garnishment will be put on hold until a judgment has been made.

If the ruling is in your favor, your wages won’t be garnished for 12 months or the garnishment amount will be reduced. If you’re unsuccessful, the 15% allowed by law will be removed from your pay to satisfy the debt.

File for bankruptcy

Filing for bankruptcy can give you some reprieve from wage garnishment. When you file for bankruptcy, an automatic stay prevents creditors from collecting on debts. However, this is just temporary; it remains in effect until your bankruptcy case has been resolved.

If you’re looking for a more permanent solution, it is possible to have private and federal student loans discharged during bankruptcy. However, it’s important to note that discharging student loans is notoriously difficult and is rarely granted.

To attempt a loan discharge, you must file a separate action called an adversary proceeding and prove undue hardship. This requires the help of a bankruptcy attorney, which could add to your financial burden. If the loans are not discharged, wage garnishment will resume once your bankruptcy is finalized.

Use legal aid and financial counseling

If you’re faced with student loan wage garnishment and aren’t sure where to turn for help, there are several free legal resources available, such as:

LawHelp.org: A site that helps you find free legal help from nonprofit providers in your state
Legal Services Corporation (LSC): Provides free legal aid to low-income individuals and connects them with local assistance
Free Legal Answers: Allows you to ask attorneys questions and receive answers online free of charge

You can also find help to get your finances back on track by contacting a reputable credit counseling service. The best place to start is the National Foundation for Credit Counseling; they can negotiate with all of your creditors (not just your student loan lender) and help get your debt under control.

Depending on the amount, wage garnishment can have a significant impact on your ability to save for retirement or other financial goals. If you find yourself affected by wage garnishment, take a hard look at your budget and living expenses. From there, develop a plan to pay off debt and stay out of debt so you can get back on track with long-term savings.
Chloe Moore, CFP®

How to prevent future garnishments

To avoid wage garnishment in the future, it’s important to stay on top of your student loan payments and know your options for help. Below are some simple ways to protect yourself.

Stay in good standing

The best way to prevent future wage garnishments is to keep your student loan in good standing. Here are a few tips to help you stay on track and avoid defaulting on your loan:

Choose a repayment plan that works for you: Federal student loans offer a variety of repayment plans, with many of them based on your income; research the various kinds and sign up for one that offers an affordable monthly payment.
Create a budget: Analyze your income and expenses then create a detailed budget that includes your monthly student loan payment; this helps ensure you can meet all your financial obligations to avoid falling behind.
Set up automatic payments: Have monthly payments automatically deducted from your bank account. Not only will this prevent you from accidentally missing payments, you may also qualify for an autopay discount through your lender or loan servicer.
Stay in contact with your loan servicer: If you experience financial difficulties and are concerned about paying your loan, reach out to your loan servicing company to see what options might be available.

Explore forgiveness and relief programs

If you’ve been paying on your federal student loans for a while and are on an income-driven repayment plan, you may qualify for loan forgiveness. Under an IDR plan, any remaining balance can be forgiven after 20 to 25 years of payments, depending on the plan.

Teachers and those who work for the government or qualifying nonprofits have an additional student loan forgiveness program. After making 120 payments, the remaining balance on your federal student loans will be forgiven.

If you don’t currently qualify for student loan forgiveness and are facing financial hardship, you should consider putting your loans in deferment or forbearance.

A deferment allows you to pause your payments up to three years without accruing interest.
A forbearance temporarily stops payments for up to 12 months at a time, but interest continues to accumulate.

Remember that these options are typically only available with federal student loans; private lenders set their own rules and rarely offer these types of benefits.

If your wages are being garnished for a student loan, unfortunately, they will continue to be garnished until they are paid in full. If you have smaller debts that can be paid off quickly or other debts with a significantly higher interest rate, prioritize those debts first, then take the amount you were using to pay those loans off and tackle the student loan. If you have federal student loans, contact your servicer to see if loan rehabilitation or a different payment plan is an option
Chloe Moore, CFP®

FAQ

How long does student loan garnishment last?

Student loan garnishment can continue until your loan is paid in full or you take action to stop it. For federal student loans, this typically involves repaying the debt, entering into a rehabilitation program, or consolidating the loan.

Garnishment may stop sooner if you negotiate a repayment plan or prove financial hardship. It’s important to act fast to explore your options and minimize the length of time your wages are garnished.

Can my employer fire me because of wage garnishment?

No, federal law prohibits an employer from firing you solely because your wages are being garnished for a single debt, including student loans.

However, if you have multiple garnishments for different debts, you are not protected under the same law, and your employer could choose to terminate your employment. If you believe you were fired illegally, seek legal advice, or contact the Department of Labor.

What happens if I quit my job during garnishment?

If you quit your job while your wages are being garnished, the garnishment will stop because you have no wages to garnish. However, this does not eliminate your debt. The garnishment may resume once you start a new job. The lender can issue a new garnishment order to your new employer. Plus, interest and penalties may continue to accrue on your debt while it isn’t being repaid.

Can garnishment affect my credit score?

Yes, wage garnishment can indirectly affect your credit score. While the garnishment itself is not reported to credit bureaus, the events leading up to it—such as defaulting on a student loan—are reported and can damage your credit score. Missed payments and default can stay on your credit report for up to seven years, making it harder to get approved for credit in the future.

Are there limits on garnishing Social Security for student loans?

Yes, there are limits on garnishing Social Security benefits for student loans. For federal student loans, the government can garnish up to 15% of your Social Security benefits. However, a protection in place ensures you receive at least $750 per month.

Social Security benefits are generally protected from garnishment under federal law for private student loans, but it’s always best to check your specific circumstances with a legal advisor.