Preventing Student Loan Wage Garnishment: Steps to Take Before Default
Millions of student borrowers may face wage garnishment starting this summer, as estimated by credit bureau TransUnion. By August, around 3 million borrowers could be in default, risking having 15% of their wages withheld by the government to pay off their debts. The exact start date for wage garnishment has not been specified. Since the end of the pandemic-related pause on student loan payments in May, borrowers have had to reevaluate their financial situations. Another 2 million borrowers are expected to default in September, according to TransUnion.
It is crucial for borrowers to check the status of their federal student loans on studentaid.gov and take steps to remove them from default before wage garnishment resumes. Many borrowers may not be aware that their loans are in default, especially if they have multiple loan servicers or different types of federal loans. To avoid wage garnishment, borrowers can enter a rehabilitation agreement or consolidate their loans into a new federal Direct Loan.
Due to long wait times and dropped calls when contacting loan servicers, borrowers are advised to seek assistance from their congressperson. Congressional offices have dedicated teams for constituent casework and can help with issues related to federal agencies like the Department of Education. It is essential for borrowers to act promptly to address any default status and prevent wage garnishment.
In conclusion, borrowers facing potential wage garnishment should take proactive steps to address their student loan default status and seek assistance from their congressperson if needed. By understanding their options and taking action to resolve default status, borrowers can avoid having their wages garnished by the government.