The Government Did a Bank Levy for My Mother-In-Laws Parent Plus Loan


Dear Steve,

Thirteen years ago my mother in law took out a Parent Plus loan via Wells Fargo for my wife to go to college around age 19. Last year she stopped making payments due to situations we are unaware of.

A representative from WF called and left my wife a voicemail last week about debt collection and with busy schedules we didn’t call them back. Our savings and checking accounts are with Wells Fargo, and on Friday they took out $3100ish (50%) of our savings. Then they went into our joint checking and took another $700ish. Do they have a right to do that before sending us any documentation or giving us a chance to agree to some kind of payment plan?

We are caught off guard. We looked up Parent Plus loans and those type of loans seem to be the parents responsibility. We aren’t saying we want her to get the brunt of the loan payment, but are wondering if they have the right to just take our funds. We would have liked to be able to se t up a payment plan since $3900 is a lot of money for us.

What are the situations where a bank is allowed to take you money without your consent?



Dear Jake,

Obviously this situation is very state specific and only a lawyer licensed in your state can give you specific legal advice. I would contact a lawyer for help ASAP within 10 days of the levy to see if it can be reversed.

Your situation presents a good reason why odd out of the place collection calls on federal student loans should be dealt with in one way or another; promptly. Federal student loans do not have to go to court to take action to levy or garnish wages. They have an administrative right to do so. A head in the sand can easily result in a hole in the pocket.

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What I don’t know about your situation is if your mother-in-law might be a signer on the bank account or if you or your wife might have been an endorser on the loan. If so, either way, it would expose your account to a levy.

What is interesting is they only took out 50% so I’m wondering if this isn’t the case. One party on the account has created an opening into the account. Of course that might be an error by the Department of Education but something has given them suspicion the levy was possible.

Federal student loan bank levies are not that common. The Department of Education wants to work out repayment plans on these things before taking such action. In a perfect world your mother-in-law would have worked out an Income Contingent Repayment on these that was based on available funds. Her payment could have been next to nothing and kept this out of default and avoid this issue all together.

Here are two excellent articles that provide specific guidance and action steps to lower Parent Plus loan payments; click here and here.

At this point the best course of action is going to be rounds of communication with either your mother-in-law, the Department of Education, your loan servicer, a local attorney, and your bank. You need more information to find out what exposed your account and if the levy can be reversed if your mother-in-law works out an income based repayment plan, right away.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

Damon Day - Pro Debt Coach

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