Starting May 5, 2025, The Department of Education will begin collections on defaulted loans. This can lead borrowers already in default into wage garnishment.
Wage garnishment for defaulted federal student loans can happen without a court order, and the process is known as administrative wage garnishment (AWG). Here’s how it works:
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You default on your federal student loans — typically this means you haven’t made a payment for 270 days.
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Once in default, your loan is turned over to a collection agency or the Department of Education's Default Resolution Group.
Before garnishment begins, you’ll receive a 30-day notice called a Notice of Intent to Garnish Wages. It will include:
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The amount you owe.
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Your rights to request a hearing.
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How to avoid garnishment (usually by setting up a repayment plan or proving financial hardship).
For Federal student loans, the amount that can be garnished depends on your income.
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Up to 15% of your disposable income (what’s left after legally required deductions like taxes and Social Security).
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But you must be left with at least 30 times the federal minimum wage per week (currently $7.25 × 30 = $217.50).
How to Stop Garnishment
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Rehabilitate your loan (make 9 on-time payments in 10 months). https://bysavi.zendesk.com/hc/en-us/articles/40638301508627-Getting-out-of-Default-Loan-Rehabilitation
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Consolidate your loans and agree to a repayment plan. Note, you might still need to request with a judge to have the garnishment order lifted before you can consolidate. https://bysavi.zendesk.com/hc/en-us/articles/40639044800403-Getting-out-of-Default-Consolidation
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Pay off the loan in full (not always realistic, but it does end garnishment).