Leave a comment

Defaulting on student loans could lead to wage garnishment

There’s a dirty little secret of the student debt crisis. One that affects millions of borrowers, but isn’t talked about at dinner tables, on social media or in think pieces about student loans.

The taboo topic is wage garnishment and it works like this: Default on your federal student loans and the government can take up to 15 percent of each paycheck to satisfy your debt. That amounts to $300 per month for someone who normally takes home $2,000 per month. The Education Department can also withhold federal benefits like tax returns and Social Security payments.

Garnishment is an effective tool to recoup unpaid loans – private collection agencies enlisted by the Education Department took in over $841.6 million via wage garnishment in the 2018 fiscal year – but it inflicts serious financial strain on borrowers who are already struggling.

[Read More]

Leave a Reply

Your email address will not be published. Required fields are marked *