Student loan debt doesn’t just disappear—if you fall behind, the government can garnish your wages, tax refunds, and even Social Security benefits. In some cases, the fines and penalties added to your debt can end up costing as much as your original loan.
If you’re struggling with student loan payments, you have options. At Delmarva Collections Inc, we help borrowers navigate repayment challenges and avoid financial penalties. Here’s what you need to know about wage garnishment—and how to stop it before it happens.
How Student Loan Wage Garnishment Works
When federal student loans go into default (typically after 270+ days of non-payment), the U.S. Department of Education can:
✔ Withhold up to 15% of your disposable income (via wage garnishment)
✔ Seize federal tax refunds (Treasury Offset Program)
✔ Withhold Social Security benefits (in rare cases)
Private student loans require a court order before garnishment, but they can still sue for repayment.
Shocking Reality: Fees & Interest Can Balloon Your Debt
Many borrowers don’t realize that collection fees (up to 24% of the debt) and accrued interest can make the total owed much higher than the original loan.
Example:
Original debt: $20,000
After default: +$4,800 in fees (24%) + interest
Total owed: $25,000+
How to Stop Student Loan Wage Garnishment
1. Get Out of Default (Federal Loans)
The best way to stop garnishment is to rehabilitate your loan or consolidate it.
Loan Rehabilitation:
- Make 9 affordable monthly payments (based on income)
- After completion, garnishment stops, and your loan returns to good standing
Direct Consolidation Loan:
- Combines multiple loans into one
- Removes default status if you agree to a new repayment plan
2. Negotiate a Settlement
If you can pay a lump sum, the government or private lender may accept a reduced amount to close the debt.
3. Claim Financial Hardship
If garnishment would cause extreme financial strain (e.g., you can’t pay rent or groceries), you can request a hearing to reduce or stop garnishment.
4. Switch to an Income-Driven Plan (Before Default!)
If you’re struggling but not yet in default, enroll in an Income-Driven Repayment (IDR) plan, which caps payments at a percentage of your income.
5. Bankruptcy (Last Resort)
While student loans are rarely discharged in bankruptcy, it’s possible if you prove undue hardship (extreme financial difficulty).
How to Avoid Wage Garnishment Altogether
Prevention is always better than dealing with garnishment. Protect yourself by:
✔ Setting up autopay (even small payments keep loans in good standing)
✔ Applying for deferment/forbearance if unemployed
✔ Contacting your loan servicer early if you can’t pay
✔ Exploring loan forgiveness programs (PSLF, Teacher Loan Forgiveness, etc.)
Need Help With Student Loan Debt?
If your wages are being garnished—or you’re at risk—Delmarva Collections Inc can help you stop collections, negotiate settlements, or find affordable repayment plans.
Contact us today for a free consultation and take control of your student loans before penalties pile up!
