Avoid Wage Garnishment of a Texas Guaranteed Student Loan
A non-profit corporation acting as a loan guarantor, Texas Guaranteed (TG) is required by federal law to deduct money from your paycheck to pay back your student loans if you don’t make other voluntary arrangements. This is called Administrative Wage Garnishment and can take as much as 15 percent of your disposable income from each paycheck in order to make payments toward your student loan debt.
Disposable income is defined as your gross salary minus any deductions like income taxes, mandatory retirement deductions, or child support. In the state of Texas, your employer is also entitled to take an additional $10 administration processing fee per transaction. If you hold multiple loans from more than one guarantor or the U.S. Department of Education, you could be facing a 25 percent wage garnishment. In order to avoid this, it is important to understand your rights and responsibilities as a borrower.
Stay on Top of Your Debt
The Project on Student Debt estimated that in 2013, seven out of 10 students graduated from college with an average of $28,400 each in student loan debt. This can be daunting, and many students will not have the means to start making payments as soon as their six-month grace period ends. Do not bury your head in the sand, however, as the debt will not absolve itself. Instead reach out to TG to determine if there are options to help you lower your debt or payments before you enter default or miss payments. Refinancing, deferment, or consolidation all may be viable options, depending on your situation.
Make sure that Texas Guaranteed has your current contact information, especially your mailing address, as this will be how they will contact you with any information about your loan(s). Be sure to read all information that comes from TG to make sure you know exactly where you stand and what your repayment schedule is.
Know Your Rights
If you have already fallen behind, Texas Guaranteed may look to garnish your wages to make payments toward your loan(s) on your behalf. Knowing the laws in place and what your rights are is an important first step if you are facing wage garnishment.
First, you will be mailed a Notice Prior to Wage Withholding at least 30 days before wage garnishment begins explaining the process and what is happening. This gives you an opportunity to make a payment and halt the initiation of wage garnishing. Once the actual garnishing starts, it cannot be stopped until your loan is paid off, or you are terminated from your place of employment. Your other rights by law are:
- The opportunity to schedule a hearing to plead your case
- If the Order of Withholding from Earnings has yet to be issued, you can still negotiate a repayment plan that works for you
- The right to copy and inspect any and all records that relate to your debt
- An employer cannot refuse to employ you, fire you, or disciple you due to wage garnishment
Texas Guaranteed has many flexible repayment plans and options available to help keep you from ending up in collections through default, which can negatively affect your credit ratings. Wage garnishment payments are not considered voluntary, and in order to avoid these negative consequences, you must set up and pay down your debt in an agreed-upon and voluntary repayment plan. Call or email TG in order to learn more about your repayment options.