Pennsylvania residents who have fallen behind on their student loan payments may soon notice a reduction in their paychecks. This is due to a new policy by the administration of former President Donald Trump, which allows the government to garnish wages from borrowers who are in default on their student loans. A borrower is considered in default if they have not made any payments for at least 270 days.
According to the U.S. Department of Education, approximately 1,000 defaulted student loan borrowers will receive notices this week, with the number expected to grow each month. This marks the first time since the start of the pandemic in 2020 that wage garnishments for student loans have been initiated.
Understanding Wage Garnishment
Wage garnishment is one of three methods the government uses to collect payments from borrowers who have defaulted on their student loans. The other methods include withholding tax refunds and federal payments. Wage garnishment involves deducting a portion of the borrower’s paycheck directly by their employer.
Under this process, companies that hold student loan debt can request employers to withhold up to 15% of the borrower’s paycheck without going through a court process. Before any garnishment occurs, borrowers must receive a notice at least 30 days in advance. This gives them the opportunity to contest the garnishment by filing for a hearing.
Borrowers who believe that withholding 15% of their paycheck could cause financial hardship, or who disagree with the amount or enforceability of the debt, can request a hearing. Additionally, those who have been employed for less than 12 months also have the right to challenge the garnishment. Requests for a hearing must be submitted within 30 days of receiving the notice.
To initiate a hearing, borrowers should contact their loan servicer for guidance on how to proceed. Hearings can be conducted in person in Atlanta, Chicago, or San Francisco, over the phone, or through submitted documents. A decision on the hearing will typically be made within 60 days.
Student Debt in Pennsylvania
The impact of student debt is significant in Pennsylvania. According to the Education Data Initiative, Pennsylvanians collectively owe $67.4 billion in student loans. There are more than 1.8 million borrowers in the state, with an average debt of $36,120 per individual.
Approximately 14% of Pennsylvania residents have student loan debt, and over half of these borrowers are under the age of 35. Data reveals that 24.4% of borrowers carry between $20,000 and $40,000 in debt, while 2.17% have more than $200,000 in outstanding loans.
Certain institutions in Pennsylvania have higher default rates among their graduates. Thomas Jefferson University in Philadelphia has the highest rate of students defaulting on their loans within two years of graduation, according to CollegeRaptor.
Here are the five colleges in Pennsylvania with the highest loan default rates:
- Thomas Jefferson University
- Bucknell University (Lewisburg)
- Carnegie Mellon University (Pittsburgh)
- Lafayette College (Eaton)
- Lehigh University (Bethlehem)
These statistics highlight the growing concern surrounding student debt and its impact on individuals and communities across the state.