The Federal Government is restarting student loan garnishments in July, 2025.
The federal government can garnish up to 15% of the net of a person’s wages, but must leave them at least as much as the Federal Minimum Wage. Unlike a normal garnishment, the federal government need not go to court and get a judgment against the borrower. They need only send a letter to the borrower and the borrower’s employer.
Will losing 15% of your income be a hardship? There are some options to stop the garnishment.
Options To Stop Student Loan Garnishment
- Request a hearing. The garnishment letter will have instructions on how to request a hearing. You must send the Department of Education evidence to support your postion. They will stop the garnishment if you can show any of these:
- You paid the student loans already and don’t owe it anymore.
- Garnishment of 15% of your pay would create an extreme financial hardship.
- You have less than 12 months at your current job after having previously been involuntarily separated from employment.
- Call the Department of Education and try to get the loan out of default.
- Borrowers can often consolidate or rehabilitate if they haven’t done so in the past. These actions make the loan current and stop the garnishment, but add a one-time fee of up to 18% to the balance. They also require that you make the normally scheduled monthly payments on the student loans.
- Once the loans are out of default, you can often sign up for an Income-Driven Repayment plan. These plans have a monthly payment based on your income, NOT on the balance of the debts. You can sign up for these plans at: https://studentaid.gov/
- While the loans are in default you are not allowed to sign up for Income-Driven Repayment Plans. If you got a garnishment letter, then the loans are definitely in default.
- File bankruptcy. Even though student loans usually are not dischargeable, bankruptcy always stops garnishment.
- Chapter 13 can stop garnishment for 5 years and often has a monthly payment of only $100, depending on your budget.
- Laws changed in 2023 to allow many more people to discharge student loans. The following people now qualify to discharge their student loans in bankruptcy, if you:
- Graduated or withdrew from school at least 10 years ago, AND
- Have made payments on the loans or done an Income-Driven Repayment Plan, AND
- Are living paycheck to paycheck without room in your budget for a student loan payment.
- Click Here To Try our Student Loan Discharge Prediction Tool! Walker and Walker has gotten student loan discharges for almost 100 Minnesotans as of June, 2025 and are happy to assess the likelihood of success for you.
- Most people have a 720 credit score only 2 years after bankruptcy and you can get a mortgage only 2 years after bankruptcy. Bankruptcy is often the fastest way towards a stable middle class financial situation.
What should the first step be?
I recommend speaking with your servicer on the phone. They will tell you what a payment plan would look like and how quickly you could get it in place. They will also be able to tell you if you qualify for extreme financial hardship, or consolidation or rehabilitiation.
It is very hard to find good information on loan statuses and amounts because the servicer often changes. The servicer will have accurate information if you call and the representatives do want to help.
What about private student loans?
Private student loans do not have the power to garnish wages unless they go to court and get a civil judgment against you first. Private student loans are usually with Sallie Mae, or from a loan company, or even money owed directly to a college or university. These debts also don’t have the Income-Driven Repayment Plans or consolidation or rehabilitation available, and are more difficult to discharge in bankruptcy.
