Student loans in default and your pay is being taken

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How default happens

Federal student loans usually go into default after about 270 days of missed payments. The full balance can become due, and collection costs may be added.

What can be taken (federal loans)

• Wage garnishment: up to 15% of your disposable (take-home) pay, without a court order.
• Treasury offset: federal tax refunds and part of certain federal payments, including some Social Security benefits.

You must receive written notice first, with a deadline to respond.

Respond to notices

You can request a hearing to object, for example due to financial hardship, an incorrect amount, or if you were recently rehired after being fired. You can also set up a repayment agreement.

Ways out of default

• Rehabilitation: make 9 voluntary, reasonable and affordable monthly payments within 10 months. The default record is removed from your credit history, and garnishment stops after enough payments. Usually available once per loan.
• Consolidation: combine defaulted loans into a new Direct Consolidation Loan and choose a repayment plan.
• Pay in full, if possible.

Use free official help

Start at StudentAid.gov to find who holds your loans. Never pay a company to get out of default.

Private loans

Private lenders generally must sue and win a court judgment before garnishing wages. If you’re sued, respond on time and seek legal help; old debts may be past your state’s time limit.