How Much Can the Department of Education Garnish
The federal government has strong powers to hogtie repayment of defaulted federal student loans. Only there are limits to how much of the borrower'south income and benefits can be seized to repay the debt.
Garnishment vs. Offset
When a borrower defaults on a federal educatee loan, the federal government can seize part of the borrower's paycheck to repay the debt. This is calledwage garnishment. It is implemented past the U.S. Section of Education sending a wage garnishment order to the borrower'southward employer.
The federal government can likewise intercept income revenue enhancement refunds and office of the borrower's Social Security disability and retirement benefit payments. This is called anoffset. It is implemented by the Bureau of the Fiscal Service at the U.S. Department of the Treasury through the Treasury Offset Plan (Meridian).
Caps on Garnishment of Income and Benefits
The federal regime can garnish up to xv% of the borrower's dispensable pay to repay a defaulted federal education loan, including Federal Stafford Loans, Federal Parent PLUS Loans, Federal Grad PLUS Loans and Federal Consolidation Loans.
Dispensable pay is the borrower's pay afterwards subtracting health insurance premiums and whatsoever amounts that are required by police force to be deducted (eastward.g., Social Security taxes and income tax withholding).
The wage garnishment is done administratively, without requiring a court society.
A higher wage garnishment per centum is allowed if the federal government sues the borrower and gets a court judgment against the borrower. Borrowers tin can also voluntarily agree to a higher wage garnishment corporeality.
The federal government can also commencement up to 15% of Social Security disability and retirement benefit payments.
The full amount of income tax refunds can exist offset.
Reductions in Garnishment Percentage
Borrowers must be left with at to the lowest degree 30 times the federal minimum wage per week after the wage garnishment. Since the federal minimum wage per week is $7.25 per hour, that leaves the borrower with at least $217.50 per week. And so, if the borrower earns less than $thirteen,306 a yr, the wage garnishment percentage will likely exist less than 15%.
The offset of Social Security do good payments similarly requires the borrower to exist left with at least $750 per month.
If the borrower is already subject to wage garnishment for other federal debts, the total amount withheld for all administrative wage garnishment cannot exceed 25% of the borrower'due south disposable pay.
The federal government cannot garnish wages if the borrower has been in their current chore for less than 12 months and borrower's previous employment was involuntarily terminated.
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Source: https://www.savingforcollege.com/article/how-much-income-can-be-garnished-to-repay-defaulted-student-loans
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