Feds will start garnishing wages for some MS residents starting this week
Mississippians who’ve been struggling to keep up with student loan payments could see a major shift starting this month as the Trump Administration reinstates wage garnishments for borrowers.
“We expect the first notices to be sent to approximately 1,000 defaulted borrowers the week of Jan. 7,” Education Department officials told POLITICO and NPR.
Mississippians are more likely to be in debt from student loans than residents of any other state, with the average student loan debt being $37,552, according to the Education Data Initiative.
Here’s what borrowers should know about the change.
What is a wage garnishment?
A wage garnishment happens when a court orders a person’s earnings, including wages, salaries and commissions, to be withheld by their employer to pay for a debt like student loans, according to the U.S. Department of Labor.
In this case, employers will withhold earnings for workers who have defaulted federal student loans, according to an April statement by the Department of Education. Student loans go into default after nine months with no payment, and the entire balance becomes immediately due, per the Federal Student Aid website.
Collections on defaulted federal student loans paused in March 2020, the Department of Education said in the statement, adding that less than half of borrowers, 38%, are in repayment and current on their loans.
How does the wage garnishment process work?
Borrowers who could have their wage garnished to pay for student loans will first be notified, according to the Federal Student Aid website.
Once that notice is sent, borrowers have 30 days until collection begins. Loan holders can collect up to 15% of your disposable pay for your debt, according to the website.
Which MS colleges have the highest default rates?
These are the highest student loan default rates at Mississippi schools for graduates within two years of leaving school, according to CollegeRaptor, a college search and comparison tool:
1. Rust College in Holly Springs: 18.1%
2. Alcorn State University in Alcorn State: 13.6%
3. Blue Mountain Christian University in Blue Mountain: 12%
4. Jackson State University in Jackson: 11.7%
5. Tougaloo College in Tougaloo: 10.9%
6. Mississippi Valley State University in Itta Bena: 10.3%
7. University of Southern Mississippi in Hattiesburg: 8.8%
8. Delta State University in Cleveland: 8.5%
9. Mississippi University for Women in Columbus: 8.1%
10. William Carey University in Hattiesburg: 5.8%
Can borrowers avoid wage withholds?
Yes, there are a few ways federal student loan borrowers can avoid garnishment, including the following, according to the Federal Student Aid website:
- Negotiate loan repayment and pay no later than 30 days from the date the garnishment notice was sent
- Request a hearing if you have an objection to the amount of debt, reasons that the garnished amount of 15% would produce extreme financial hardship, or you’ve been employed for less than 12 months after being involuntarily separated from employment
Where to get assistance with student loans
Federal student loan borrowers can log into StudentAid.gov to view the status of their loans and see repayment or consolidation options.
