Student Loan Borrowers: Received a Wage Cut Notice Today? Here's How to Respond

Core Insights - Millions of federal student loan borrowers are set to receive wage garnishment notices, which can lead to up to 15% of their wages being withheld due to missed payments [1][4] Group 1: Current Situation - Approximately 9 million federal student loan borrowers are currently in default, having not made a payment for over 270 days [2] - Once in default, the entire loan balance, including principal and interest, becomes immediately due, and wage garnishments will continue until the balance is paid off or the borrower takes action [3] Group 2: Financial Impact - Wage garnishment can significantly reduce take-home pay, complicating household budgets for borrowers in default [4] - The average student loan balance is nearly $40,000, while the median amount in American households' bank accounts is only $8,000, highlighting the financial strain on borrowers [5] Group 3: Options for Borrowers - Borrowers can avoid wage garnishment by paying the full amount of their student loans before garnishments begin [4] - Options to bring loans back into good standing include loan rehabilitation or consolidation, with consolidation being quicker but not removing the default from credit reports [6][7] - To consolidate, borrowers must enroll in an income-driven repayment plan or make three consecutive, voluntary, on-time payments [7] Group 4: Legal Recourse - Borrowers can request a hearing to contest their default status or the amount owed, which must be done within 30 days of receiving the garnishment notice [10][11] - A written request must be submitted to the collection agency, and evidence supporting the objections is required [11]