Dave Says: What to Do When You Can't Afford Your Loan Payments


Dear Dave,

My husband and I have about $60,000 in federally insured student loans. Can our wages be garnished if we’re paying less than the actual payment amount? If so, how far behind do we have to be for that to happen?


Dear Jennifer,

To the best of my knowledge there’s no set formula for making this determination. In counseling people, we find some folks who are two years behind making payments before anything is done, while others are flagged at just a couple of months. In reality, they can garnish you immediately if you’re paying less than the agreed-upon amount. But in most cases they won’t mess with you as long as there’s reasonable activity on the account.

The thing most people don’t realize about student loans is that a lawyer doesn’t have to be involved for them to garnish your wages. It’s a lot like the IRS in that they don’t have to sue you in order to take your wages. Congress gave them that power because it’s a federally insured loan. And in my mind, that’s way too much power.

If you’re having trouble making your payments, don’t just throw up your hands and default. Talk to them about a deferral, and keep sending them whatever you can. It’s always better to be proactive than reactive in situations like these. Let them know you want to make good on your obligation, and ask what you can do to make this happen under terms you can afford.

Good luck, Jennifer!


*Dave Ramsey is America’s trusted voice on money and business. He’s authored four New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadership. The Dave Ramsey Show is heard by more than 6 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.

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