Student loan debt consolidation and wage garnishing are very similar. They are both ways that the U.S. Department of Education can take back the money you owe. However, they are very different and often used very differently. Let’s look at these differences between the two and then go over the specifics of student loan wage garnishment.

When student loan wage garnishment takes place, the agency will notify you of the amount it wants to garnish from your bank account. You usually have 60 days to respond to this notice, so make sure you do so in time. If you fail to do this the first time, you will have to repay the entire amount – up to a maximum of exactly $7500. Student loan authorities use these funds for their official debt relief purposes.

The first type of student loan wage garnishment that most people think about is the one imposed by the government. Under the provisions of the Covid-19 tax code, the U.S. Department of Education can now demand that your employer pays any part of your unemployment benefits they deem appropriate. You can be deducted from the entire amount owed if you request the government for a hearing, so ask for an extension and make sure that you keep your employer aware of what is going on. If you don’t ask, you’ll be surprised by the outcome.

This type of student loan wage garnishment requires a formal notice from your employer that states why you failed to repay your loans. You must also submit to the court a payment plan that shows how you’ll pay at least 30 days in arrears. In fact, you will be required to write a loan payment form with precise details. The court will then enforce the plan and the IRS will start sending out notifications.

If you’re thinking about the former method, the second option is your best bet. Your employer can still impose it, but you will probably be informed of it first. Instead, your private loan holder will likely send a collection agency to obtain information on how much you owe. They can then use this information to begin applying for a federal debt relief. Collection agencies can also garnish wages, but again, the notice requirements will be different under federal law.

When it comes to private student loan wage garnishment, many employers are simply unaware. To remedy the situation, your employer can offer you the choice of enrolling your child in an educational debt management program (also known as an EDM). Under these programs, your student loan holder will negotiate with the company to reduce your current payment. If you don’t want to go this route, many employers will allow you to repay the full amount in addition to a specified percentage. In many cases, you will also be able to reduce the interest rate and be required to make only one monthly payment.

Whether or not you opt for any of these options depends on whether your employer is willing to work with you. Even if they have no interest in helping you repay your debts, there’s likely a good chance that they’ll still send a representative to visit your home to ensure that you understand the process. For example, some EDMs will require your parent or guardian sign a form acknowledging that you understand that the garnishments will occur if you don’t continue to make your monthly premium payments. If your employer won’t help you with this requirement, you may want to consider a payment arrangement with the lender instead.

If you’re wondering whether or not you’ll be required to repay part of your debt through a CFPB, you’ll likely need to research the guidelines for your particular state. However, most private schools are subject to state laws. In order to prevent your repayment from going to collections, the school might initiate a payment plan with a non-profit credit counseling agency. This way, your repayment can be delayed while you work with the agency to find a solution. A CFPB won’t affect your student loan, but it could cause your wages to become garnished.