When you take out college loans, you sign an agreement to repay the money with interest. If you fail to meet this agreement, the government can garnish your wages, meaning that your employer pays a percentage of your income directly to the government each pay period for the purpose of repaying your student loans.
Maximum Percent
The government can garnish no more than 15 percent of your disposable pay for your student loans. Your disposable pay is your gross pay minus taxes and other paycheck deductions. The minimum possible deduction is 4.2 percent for Social Security and Medicare, as of the time of publication, which makes your disposable pay 95.8 percent of your gross pay . If the government garnishes 15 percent of this, it makes an overall maximum garnish of 14.37 percent of your gross pay.
Smaller Percent
In many cases, the garnishment will be for less than 14.37 percent of your gross pay. For example, if you have income tax withheld from your paychecks, this reduces the disposable pay on which the government calculates the amount to garnish. In addition, the garnish cannot exceed 30 percent of your state's minimum wage and also must leave you with a paycheck of at least 30 times the minimum wage in your state. The exact percentage of your gross pay that is garnished will depend on which of these situations applies to you.
Competing Garnishments
In some cases, you might have many different companies eligible to garnish part of your paycheck. The garnishes can add up to no more than 25 percent of your gross pay, so the percent of your gross pay that the government garnishes for student loans can change over time. For example, if you have a child support garnishment for 20 percent of your wages, the government can take no more than 5 percent for student loans. When the child support garnishment expires, the student loan garnishment percent will increase.
End of Garnishment
The government can only garnish your paycheck until your student loan debt, including interest and all other fees, has been paid in full. Therefore, the final garnishment amount will likely be less than the previous ones. If you would like to end the garnishment before your loan is paid in full, you must contact your lender and work out a payment plan. Lenders will generally stop garnishing your wages after you start making voluntary on-time payments of the agreed amount.
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