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Too late to rehab my fed student loans w/ wage garnish?

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I have 30k in defaulted federal student loans. My wages started getting garnished today and I already filed my federal and state tax returns. The state returns were direct deposited last night and my federal returns are due for deposit next Friday.

Should I worry about having my federal returns garnished?
Is it too late to avoid this by rehabilitating my loan?

Soaplady will be along to assist you, she is familiar with student loans.

Sub: #1 posted on Fri, 02/13/2009 - 14:51


soaplady please help! I'm married with two young daughters and I'm the sole breadwinner so losing my $5k federal return will be quite financially devastating at this point....thanks!

Sub: #2 posted on Fri, 02/13/2009 - 18:42


recap: I consolidated my 5 loans 18 months ago and already defaulted on rehab once about 6 months ago. I have a total of $31k in defaulted federal student loans.

Ok, I finally got through on the phone and am now in loan rehabilitation...for the second time. However, "cathy" says my wages will continue to be garnished until I complete the rehabilitation period of 9-12 months.

"cathy" says my payments are going to be $360 a month including wage garnishment. So $270 a month wage garnishment plus $90 monthly payments (I can afford this)...Is this reasonable and why will they continue to garnish my wages if I am rehabilitating?

I asked "cathy" if my federal tax returns were at risk of being garnished as well. She said "I don't see anything about them being at risk." Should I trust her about this? I assume she just wanted me to make payments and doesn't care or even know. Who would know? and how can put a hold on federal tax return garnishment?

Lastly, can I negotiate the collection interest while I am in rehabilitation?

Sub: #3 posted on Fri, 02/13/2009 - 20:51


If you already completed a rehab program meaning that you made the 9 payments and the new loan was funded, you are ineligible for another can only rehab once.

Federal law states that if you are being garnished, and want to rehab, you payments must be made over and above the garnishment.

Collectors really have no way of knowing if an account is included in the tax offset program. Some guarantors send updates, some don't. Basically if you were not in repayment last year, you are at risk for having your taxes taken. Call the IRS...they will be able to tell you if you have lien.

No you cannot negotiate interest or collection fees while in rehab. If you defaulted on a Direct Loan, you collection costs will be waived upon the completion of the rehab. If you had a FFELP loan, collection fees are not waived.

Sub: #4 posted on Fri, 02/13/2009 - 21:05

Moderators Cum Industry Expert
(Posts: 17209 | Credits: 4746.13)

So, my loans are being rehabilitated at an affordable rate and my credit will improve after 9 months AND I can return to grad school. Yes, my wages will be garnished but it is only 15% + $90/month ($360 total).

Also, I called the IRS and there is no lien against my federal tax returns!:) I received my state returns already.

First payment is coming from my state returns and I am placing $900 from federal returns in it's own checking account so that the monthly payments can be automatically withdrawn ON TIME, CONSECUTIVELY, EVERY MONTH!! :D

I literally knew nothing about default loans, wage garnishment etc. yesterday so thanks to all the awesome advice on these forums. I'm going to disneyland!!!

Sub: #5 posted on Fri, 02/13/2009 - 23:43


:D :P God Bless you Brock :!:

Sub: #6 posted on Sat, 02/14/2009 - 04:04

Lukeskywalker Lukeskywalker

(Posts: 1909 | Credits: 185.22)

will they take my federal tax return?

Sub: #7 posted on Thu, 04/16/2009 - 05:37


Are you in default??

Sub: #8 posted on Thu, 04/16/2009 - 05:39

Moderators Cum Industry Expert
(Posts: 17209 | Credits: 4746.13)

i dont know wat u mean default?not on any student loans

Sub: #9 posted on Thu, 04/16/2009 - 06:23


Then who would take your taxes for what?

Sub: #10 posted on Thu, 04/16/2009 - 06:25

Moderators Cum Industry Expert
(Posts: 17209 | Credits: 4746.13)

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