Financial aid distributions arrive at a student's educational institution first, where the funds are applied to tuition and other fees required for attendance at the school. The remainder of the financial aid funds are then distributed to the student by check or electronic deposit. Federal law offers protection against the garnishment of financial aid distributions.
Garnishments Defined
A garnishment is a legal order that instructs an employer or financial institution to withhold a certain portion of a person's money. The writ of garnishment served on the employer or financial institution includes instructions about where to send the garnished funds, such as a specific creditor or to the court. A garnishment may occur once or several times, until the amount of money granted by the court has been collected. A garnishment may also be executed by a federal agency, such as the IRS, or a state tax agency.
Student Loans
Student financial aid, which assists students in paying for tuition, books and other costs associated with attending an educational institution, enjoy an exception that protects the funds from garnishments. Grants, loans and even work assistance that are awarded to a student, including "property traceable to such assistance," per U.S. Code Section 1095A, cannot be subjected to garnishments. This provision protects students from having to drop out of school because of garnishment actions, meaning students can continue attending school without fear of their educational pursuits being disrupted.
Federal Limits
The federal government has placed restrictions on the amount of a person's income that can be garnished, protecting at least a portion of a person's income so he can pay for living expenses. The maximum amount that may be garnished from a person's weekly pay is either 25 percent of that person's income or the amount of the person's income that is beyond 30 times the federal minimum hourly wage, whichever amount is less. The garnishment may not consume more than 60 percent of the person's disposable income for the week.
Other Exceptions
Any portion of a person's income that has been designated as going toward state or federal taxes owed by that person is exempt from garnishment. Money from a person's pay that is set aside for alimony and child support payments also are protected from garnishment. If a person is supporting a spouse or child, a garnishment may only take only up to 50 percent of that person's disposable income.
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