Feds Garnish Wages To Collect Student Loan Debt
More and more student loan borrowers are learning the hard way what happens when they cannot afford their student loan payments.
You can run but you can’t hide from your student loan debt!
According to a recent article by the Wall Street Journal, the U.S. Department of Education is aggressively pursuing payment from borrowers who are in default, meaning, those who have missed 12 (or more) monthly payments.
The Education Department, the nation’s largest student lender, is docking paychecks (taking up to 15% of after-tax wages) from student loan borrowers who are in default to help pay down their debt.
Unlike private lenders, the government doesn’t need court approval to garnish workers’ wages.
More than 174,800 borrowers, including college dropouts, teachers, doctors and other professionals, saw their paychecks take a dip in 2013 as their wages were garnished by the Education Department. That’s a 45% increase from 10 years ago. It also represents just 8% of the 2.2 million federal student loan borrowers who were in default as of September 2013.
The Department of Education said it is working to help students get a college degree while also making sure taxpayer money that is funding student loans is repaid. “Wage garnishment is a tool of last resort used by the department to recover defaulted loans,” said department spokeswoman Dorie Nolt.
This is taking a massive toll on borrowers, as many experience several years of docked wages.
About 72% of such borrowers in fiscal 2011 still were getting money taken out the following year, according to the Education Department. Many remain in garnishment for at least five to 10 years, said Mark Kantrowitz, senior vice president at Edvisors.com, a Las Vegas-based financial aid website that tracks student loan debt.
The government has a couple other tricks up its sleeve to collect defaulted student loans.
These days Uncle Sam can do more than garnish your wages. He can report you to credit agencies and tap your tax refunds and Social Security payments until the debt is paid in full.
Of course, borrowers do have repayment options intended to help keep them from defaulting.
Borrowers who are struggling with their high student loan payments have deferment and forbearance options if they can prove financial hardship.
If you want help qualifying for a deferment or forbearance, or to hear about other repayment options, including loan forgiveness, call us right now at 877-433-7501. Our student loan counselors can help you see if you qualify for any options that can help you ease the burden of your student loans, and keep you from default.
Remember, your student loans are not going to go away. Even if you declare bankruptcy, your loans will likely still remain, waiting to be paid.
If you’re wondering if your student loans can be forgiven, click here now!
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