How to File for Hardship After a Student Loan Wage Garnishment

Student loan debt is on the rise, with the average 2018 graduate owing $29,800. If you're one of the 44.7 million Americans who borrowed money to get an education, you may find it difficult to keep up with your monthly loan payments after graduation. This may be due to a lack of jobs in your area for your field, the rising cost of living or a health issue that prevents you from working.

Once you default on your student loans, the lender has the right to garnish your wages. If this happens, you can request an economic hardship deferment.

TL;DR (Too Long; Didn't Read)

You can visit the Department of Education website to download a form for requesting economic hardship deferment. You'll fill out the form, sign and date it, include supporting documents and mail it to the stated address.

Challenge the Wage Garnishment

If the wage garnishment has already taken place, then you'll first want to challenge it. Check the timeline to determine whether proper procedure was followed. Garnishment can only happen after a student has defaulted on federal loans by going 270 days without making a payment. Private loans may differ, so check your promissory note for this information.

You should have also been given 30 days' notice prior to the garnishment taking place. You have a right to request a hearing before or after the 30 days' notice. At that time, you can present your case and hopefully have the wage garnishment overturned.

Request an Economic Hardship Deferment

Should you find the wage garnishment, which is typically 15 percent of your paycheck, is causing a financial hardship for you, you can request an economic hardship deferment. You can attempt this even if you were not successful in challenging the wage garnishment.

The form you'll need to fill out for federal loans is located on the Department of Education website. Be prepared to provide your personal information, including your Social Security number, your monthly income, family size and whether you are receiving public assistance or have ever served in the Peace Corps. After signing and dating the form, gather documentation to prove any information you provided on the form and mail the package to the address in the form instructions.

Make Payment Arrangements

Even if you are granted an economic hardship and the wage garnishments cease for the time being, you'll still have to pay back the student loan once the set time for the hardship has ended. Calling the lender and arranging payments that you can afford is the best way to keep the wage garnishments from resuming. In most cases, both private and federal lenders are willing to negotiate payment arrangements.

If you can demonstrate financial need, your federal loans may also qualify for one of their repayment plans. Options include the Income-Based Repayment Plan, the Pay As You Earn Repayment Plan, the Revised Pay As You Earn Repayment Plan, and the Income-Contingent Repayment Plan.

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