Help with defaulted Student Loans

I am browsing the site for information about defaulted student loans.

There is a whole other forum on this site about student debt and options available for controlling it.

Facing Loan Default

For student loans authorized under Section 435(i)Title IV of the Higher Education Act, default occurs on a Federal Family Educational Loan (FFEL) program loan after a default has persisted for 270 days in the case of a loan repayable in monthly installments or 330 days in the case of a loan repayable in less frequent installments. The change is effective for loans for which the first date of delinquency occurred on or after October 7, 1998. During the delinquency period, your loan holder must exercise "due diligence" in attempting to collect the loan; that is, your loan holder must make repeated efforts to locate and contact you about repayment. If your loan holder’s efforts are unsuccessful, steps will be taken to place the loan in default and to turn the loan over to the guaranty agency in your state. Your loan holder may "accelerate" a defaulted loan, which means that the entire balance of the loan (principal and interest) becomes due in a single payment.

Once your loan is assigned to a guaranty agency or the U.S. Department of Education (Department) for collection, the following steps may be taken to recover the outstanding balance due:

The U.S. Treasury may offset your Federal and/or State payments to repay your defaulted loan.

You may have to pay additional collection costs after your loan is assigned to a private collection agency for collection.

Also, you may be subject to Administrative Wage Garnishment, whereby the Department will require your employer to forward 15% of your disposable pay toward repayment of your loan.

Federal employees face the possibility of having 15% of their disposable pay offset by the Department toward repayment of their loan through the Federal Employee Salary Offset Program.

The Department may take legal action to force you to repay the loan.

Finally, credit bureaus may be notified, and your credit rating will suffer.
Once a loan is declared in default, you are no longer entitled to any deferments or forbearances. In addition, you may not receive any additional Title IV federal student aid if you are in default on any Title IV student loan until you have made payments of an approved amount for at least six consecutive months. Please see Going Back to School for more information on this topic.

To remove your loan from default, please visit the Repaying section of our site for a complete list of repayment options to assist you.

I have a student loan in default. In addition to wage garnishment, can the department of education go after my bank account or my certificate of deposit?

Yes, I believe they can. They can also take your federal tax refund.

And social security income, too.

They could but probably won't. Seizing these types of assets even for the government requires a judgement. Generally judgements are reserved for balances in excess of $100k and for professionals who are self employed and refuse to pay.

I posted this earlier in another thread....I hope it helps you.....Good Luck!!!

I was in the process of consolidating my loans, and, was foolishly under the impression that they would base your loan payments according to your adjusted gross income. This is not true....beware....if you are in default and consolidate with them....your payments will be figured on your entire gross yearly income with no consideration whatsoever for any other payments you have....including your home, car, medical, utilities, groceries or anything.

I was led to believe that they would base the payments on what we could afford after our normal living expenses....this is not true....after several phone calls to them....I got the real truth....they do not consider any of your living expensives.....strictly gross income!!

And yes they can garnish wages, tax returns, and also your bank accounts. Pnce again I hope this works out for you and can help in some way.

I myself decided to contact The National Consumer Advocate and locate an attorney. I have listed the link below.

I believe you will also find a link there to help them in lobbying congress fighting the unfair and unjust practices that are currently taking place concerning Student Loan issues!!!


http://www.naca.net/find-consumer-protection-attorneys/

There is a list there for Attorneys listed in each state that are advocates and have experience in fighting unfair, ridiculous and impossible Student loan payback practices!!!

Can the Dept of Ed take your social security back pay for student loans in addition to garnishing?

Just my opinion, but I think they'd garnish the past month payments at the same rate as present/future monthly benefits. I doubt they'd yoink the whole thing.

The amount they garnish is something like 15% to 25%.

That is 15-25% of disposable income AFTER taxes.

They garnish at 15% of disposable pay after involuntary deductions.

I was recently garnished for defaulted private school loans. What they did is allowed me minimum wage x 30 hours + $2.50 per child under the age of 18 per week. Then they subtracted that from my actual income (gross) and whatever was left over they got 25% of. My boss actually ended up paying them a lot more than that out of my check but it got paid off sooner. I am still trying to recover from the months of small (very small) checks. Definitely my other bills suffered. I actually expect the second part of that same loan (that they haven't collected on yet) to be garnished at anytime. They didn't touch my bank accounts.

I'm expecting to be on full disability within a few months and I have an outstanding student loan in the 18k range. Can they take my back pay from the disability, bank account or garnish my SS check each month?

Yes...if this is a federal loan, any government payment is garnishable. If a private loan no.