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The government can absolutely garnish your wages or taxes if you have defaulted student loans and you don’t have a deferment.
This is why it’s so critical to find solutions if you’re struggling with your federal student debt payments. If you don’t, then the government is 100% within their right to garnish money from your wages or taxes. There can also be a salary offset for federal employees.
Student loan garnishment means that the government takes a chunk of your paycheck or your tax returns. The government then uses that money, your money, to pay down your student loans. Thankfully, this only happens when you are in default. That’s when you fail to make money payments for 9 consecutive months.
At that point, the government goes after your cash and it’s totally legal. How much can they take? Up to 15% of every paycheck and all of your tax refunds. This is definitely something you want to avoid. Luckily, there are proven ways to grind garnishment to a halt. Learn about them at Debt.com.
By law, there is not much wiggle room between being current with your payments and being in default. As soon as you miss a payment by 30 days, a loan becomes delinquent. Then, if your loan payments are monthly, the loan goes into default after 270 days (9 months).
Fact: If your payments are on less than a monthly schedule (e.g. bi-monthly), default occurs after 330 days (11 months).
Once the loan goes into default, the government can start the process for garnishment. They have to send you a notice of garnishment or offset 30 days prior. If you don’t get things settled up in 30 days, then the garnishment or offset begins.
After you’ve defaulted, the government has three options for collecting what you owe:
Here are some common followup questions you may have:
Article last modified on April 5, 2019. Published by Debt.com, LLC .