When you owe money on a debt, the creditor can get a judgment against you and eventually garnish your wages to collect the money owed. A garnishment only involves money that you earn. When it comes to student aid, you do not have to worry about this money being garnished.
Student Loans
One of the most common forms of financial aid is the student loan. The federal government provides student loans in the form of Stafford and Perkins loans. With these types of loans, you are not actually earning any money. You are simply borrowing the money from the lender and paying it back in the future. Since you are not earning the money, your creditors cannot take the money you are borrowing in the form of student loans.
Federal Grants
Another type of student financial aid is the federal grant. For example, the Pell Grant is a common form of student aid. With a Pell Grant, you are awarded a lump sum of money to help pay for educational expenses. Federal benefits are considered exempt from wage garnishment. You did not earn this money from working, and creditors cannot take it in the form of a wage garnishment.
Private Loans
A private student loan is another form of student aid. With a private student loan, you borrow money from a private lender; the loan is based on your credit score and your ability to repay the amount borrowed. Creditors cannot garnish the amount of money that you get from the lender, because you are simply borrowing money, not earning it.
What Can Be Garnished?
When it comes to garnishing money, creditors can only garnish wages that you earn. Of that money, a maximum of 25 percent of what you earn can be garnished, according to federal laws. States also have laws, and some only allow a smaller percentage than 25 percent to be garnished. Before a creditor can garnish your wages, it must file a lawsuit and get a civil judgment against you in court. Following this, the creditor can get a writ of execution to enforce the judgment with a wage garnishment.
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