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I’m in an Administrative Wage Garnishment. How Can I Consolidate My Student Loans? – Tina

Written by Steve Rhode

“Dear Steve,

My wages are garnished for a defaulted student loan. I read your post about consolidating and getting on a reduced payment plan (IBR). I have tried this with my federal student loan agency and they will not allow me to do this. Their response is that I cannot consolidate while I am in administrative wage garnishment. They insist I must make payments IN ADDITION to the garnishment for 5 months. I cannot afford this! My family and I are on borrowed time…until we are homeless over this. I have written my senator, filed a complaint with the Ombudsman group, written the White House and no one will help! I thought education was important, but now am rethinking if I should encourage my children to even go to college!

Is this true that I cannot consolidate my loans as long as I am in wage garnishment. Who can help me? I simply want to consolidate all my loans and make payments through the IBR plan!


Dear Tina,

Another approach that has worked well and is a good choice under the new rules is to talk to the servicer about a rehabilitation approach. Under the new rules the rehabilitation payment must be both reasonable and affordable repayment like, like an IBR, and be agreeable to you and the Department of Education.

I have seen cases where this payment is as little as $5 per month. This payment would be on top of the Administrative Wage Garnishment until your loan was considered rehabilitated. The rehabilitation payments would continue till you have voluntarily made the agreed-upon payments on time and the loan has been purchased by a lender.

The guidance on this says “…once the rehabilitation discussion has begun, initially considers a borrower’s reasonable and affordable loan rehabilitation payment amount to equal 15 percent of the amount by which the borrower’s Adjusted Gross Income (AGI) exceeds 150 percent of the poverty guideline amount applicable to the borrower’s family size and State, divided by 12. If the amount determined using this calculation is less than $5, the borrower’s monthly rehabilitation payment is $5.” – Source

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You might also have not known that after July 1, 2014 anyone with a new Administrative Wage Garnishment has the right to challenge the amount of the wage garnishment when imposed.

“Borrowers who object to the proposed AWG have an appropriate opportunity to challenge the existence or amount of the debt or to demonstrate that the withholding would cause financial hardship.

Borrowers who would struggle financially under a wage garnishment will be able to appeal or request a reduced payment.

Additionally, the wage garnishment will now stop after five payments made under the new rehabilitation process.”

After the rehabilitation you would be eligible to consolidate all your loans and enter the Income Based Repayment Plan.

Please post your responses and follow-up messages to me on this in the comments section below.

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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.


  • Does the 5 additional payments to get out of garnishment require that it is agreed or can you simply make the payments and it automatically will come out of garnishment? My pay is garnished twice a month. Is it additional payments of once a month for 5 months or each paycheck for 5 months?

    • It must be mutually agreed. You can just send in any five payments. And I believe it must be five months of payments, not just five payments. Depending on your income, your monthly payment under a loan rehabilitation agreement could be as low as $5.

  • Do they have to agree to accept the five additional payments or can you simply start making them? Will it automatically come out of garnishment at that point? And if they are garnishing every paycheck…which is twice a month…are your 5 additional payments required to be one a month for 5 months or every paycheck for 5 months?

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