Student Debt Takes A Bite Out Of More Paychecks
"The federal government is stepping up wage garnishment of student-loan borrowers who have defaulted, another lingering effect of the nation's ballooning college debt," according to The Wall Street Journal.
"Just over 174,800 people who had defaulted on federal student loans saw the Education Department take some money out of at least one paycheck in the fiscal year ended Sept. 30, 2013, according to data requested by The Wall Street Journal. That figure was up 45% from 10 years earlier and excludes individuals working for the federal government.
The trend is picking up steam as more people have trouble paying off their federal student loans and the Education Department—the nation's largest student lender—faces growing criticism that it isn't doing enough to prevent borrowers from slipping into garnishment.
The department said it is working to help students get a college education while also making sure taxpayer money that is funding student loans is repaid. 'Wage garnishment is a tool of last resort used by the department to recover defaulted loans,' said department spokeswoman Dorie Nolt. ...
The Education Department can automatically begin taking as much as 15% of borrowers' after-tax wages, and unlike private lenders, the government doesn't need court approval.
The lapsed borrowers run the gamut from college dropouts to doctors, teachers and other professionals who often took on heavy debt loads while earning their degrees, said Natalia Abrams, executive director at Student Debt Crisis, a nonprofit group that advocates for borrower-friendly loan-repayment options. ...
Most borrowers who wind up in garnishment stay there for a while. About 72% of such borrowers in fiscal 2011 still were getting money taken out the following year, according to the Education Department."
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