Student Loan Garnishment
When you apply for financial aid to attend a school of higher education, you'll likely borrow money from either a federal student loan institution or a private institution. With federal student loans, the government provides the funding, whereas with a private loan the funding is provided by a bank.
With a federal loan, your repayment of the loan starts when you leave school or when you attendance falls to less than half. With a private loan your payments could begin while you are attending school. Federal loans have fixed interest rates, often lower than what you would receive with a private student loan. Private loans often have rates as high as 18% and these are usually variable rates that fluctuate with market conditions.
Problems Repaying a Federal Loan or Private Loan
If you experience trouble repaying your federal student loan, it may qualify to be consolidated with other outstanding debts you have incurred. You will have more options for consolidation with a federal loan than with a private loan. With private loans you may find they offer no deferment or forbearance options. Before considering this option for funding you should have the lender explain in detail what will happen should you become delinquent or default in your payments. Federal loans usually allow you to postpone payments or significantly lower them.
Garnishment on Federal Student Loan
Federal laws give the Department of Education the right to garnish after-tax income up to 15%. It will be dependent upon what you are currently earning and cannot be put into effect if your earnings are below 30 times the minimum wage (Federal). As of this year a borrower is allowed $217.50 to be exempt from garnishment. Those earning less than this amount would be completely exempt from federal student loan garnishment.
The Federal Government has the right to garnish your bank accounts, wages, tax refunds and any property you own, without receiving a judgment from the court before doing so.
Garnishment on Private Student Loans
If you have a private student loan, it is usually treated as if it was an unsecured personal loan. Private lenders cannot garnish wages in Texas. In most cases a private student loan is not normally dischargeable if you file for bankruptcy. (neither is a federal loan) Before a private
If you are facing a student loan lawsuit on a private loan, the best plan of action is to consult with a lawyer. Contact us at Weston Legal if you have received a private student loan lawsuit
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Articles about Student Loans
- Consequences of Default on Student Loans
- Delinquent Student Loans
- Student Loan Garnishment
- Default on Private Student Loans
- Private Student Loans in Default