In today's economy, which is always changing, it's hard enough for the average worker to make ends meet without having money taken out of their paychecks. It can be hard enough to live paycheck to paycheck with regular bills and sudden, unexpected costs without having an old student loan debt come back to bite you in the wallet. If a borrower hasn't paid back a loan on time and on their own, their current employer may take money from their paycheck to pay back the loan.
Under the Higher Education Act, the Department of Education and security agencies can tell an employee's employer to take out at least 10% of each of the employee's paychecks to pay back the debt. This could happen again and again until the full amount of the debt is paid off. This method of garnishing wages is only used on people who refuse to pay back their overdue loan on their own. It is not used on people who continue to make regular payments on time.
If an employer gets an Order for Withholding of Wages, they have to follow the order. Employers will only get the information they need to follow the wage garnishment order, and they are not allowed to fire the borrower or take any other action against the person because of the wage garnishment. If someone loses their job or gets in trouble at work, they can go to federal or state court to try to get their money back. Administrative Wage Garnishment is a tool that the U.S. Department of Education uses as a last resort to collect on unpaid student loans. A notice is sent to the borrower 30 days before the Order of Withholding is issued. This notice tells the borrower that the Department of Education plans to garnish wages and explains the borrower's rights and how to appeal.
The borrower can set up a voluntary repayment plan by signing a written agreement with terms that are acceptable to the Department of Education. This way, they can avoid having their wages taken. If the borrower disagrees with the debt's existence, amount, or ability to be collected, he or she can set up a hearing to make their case and get a ruling. This is also true if the borrower thinks that having his or her wages taken out would put them in a terrible financial situation. A wage garnishment can be stopped if a request for a hearing is filed on time. Before the hearing is over and a decision is made, nothing will happen.
Borrowers can also fight a wage garnishment if they don't believe the claim is true or if the law says they can't enforce the claim right now. The borrower is responsible for providing proof or paperwork to back up any objections that are made to the debt being collected. You should find out as much as you can about garnishment laws.
