October 20, 2019

Strange and Awful Wage Garnishment Power of Student Loan Creditors

unique power of student loan creditorsAre you aware of the special dangers associated with student loan wage garnishments.  Unlike almost every other debt, student loan creditors can garnish your wages without first filing a lawsuit and proving their case in a state or federal court.

Congress issued this gift to the student loan industry several years ago when it authorized something called an administrative wage garnishment (AWG).

An AWG works as follows: if your federal or federally guaranteed student loan has gone into default, the lender (either the U.S. Department of Education or the guarantee agency) will send you a letter giving you a 30 day notice of pending wage garnishment.

This letter will advise you that within this 30 day notice period you can request an administrative hearing before a U.S. Department of Education hearing officer 1. You will not be surprised to learn that most of these AWG hearings result in a ruling in favor of the Department of Education. [Read more…]

  1. You have to request your hearing within 15 days if your loan is an FFEL loan.