Well, the fact is that he had never paid on his student loan, and prior to the garnishment he should have made arrangements to start paying on his loans. But he did not do it and now it was time to face the situation. You see, you might not want to pay, but you will have powerful government tools used against you if you do not make your student loan payments. Many lending institutions prefer that you miss your payments and go into default. When you default on a loan, the institution loves it because, after all, they do not lose a penny, but will make a good amount of additional money from you because they will add another 18.5% in collection fees to the account, which is pure profit for them and a nightmare for you, just like it was for Joe.

Next, if not first, you will have your paycheck garnished. The government can and will take a limited portion of a students paycheck who is in a defaulted student loan predicament. The government can take up to 15% of your disposable income.

A student loan repayment crisis is brewing in Pennsylvania. According to the Department of Education; students who attended for-profit institutions in Pennsylvania are defaulting on their student loans at three times the rate of those who attended traditional universities. One out of every fourteen students who attended traditional universities are also defaulting on their student loans.

Like many other states in the US, the recession has taken its toll on the ability of Pennsylvanians to meet their financial obligations. Most people consider making a hefty monthly student loan payment secondary to buying food and keeping a roof over their heads.

Unfortunately, the consequences of defaulted student loans are painful. The government will take its money from you through wage garnishments, reducing your social security benefits, and withholding your tax refund. If a student loan remains in default for an extended period of time, the government often sells it to a collection agency, most of which are notorious for their unscrupulous, mean-spirited daily demands for repayment.

What can you do to avoid these consequences?

Try to enter the Federal loan rehabilitation program, which will stop wage garnishment, silence the collection agencies, and help you become eligible once again for loan servicing options like deferment. But know that you will have to meet the strict requirements of an initial 10-month repayment schedule dictated by your Federal loan officer, and the monthly payment amount may not reflect fully your current financial hardships. I

A second option is to turn to a reputable private loan servicing and consolidating company that specializes in student loans. These companies can stop the Federal government from wage and tax refund garnishments, end the collection calls, and lower your monthly payments.

Fortunately, there is a solution that can help you completely turn things around and regain control of your life and your finances: Refinance your defaulted student loan with another organization

A third-party organization specializing in defaulted student loans can often significantly reduce your monthly payment. In fact, most people cut their monthly payments in half. It gets better. These organizations can often remove any and all wage garnishments. This even extends to judicial judgments that might have claimed an unhappy portion of your assets.

A defaulted student loan refinancing organization will most often start by offering you a number of loan consolidation options that take into account the total amount of your loans, your standard of  living, income, and other financial obligations. Based on this and other information, you and the loan service organization will be able to determine the new amount of your monthly payment, the exact terms of your new loan agreement, and the period of repayment.

In addition to greatly reducing your stress, refinancing your defaulted student loan will also leave you with more money to cover your other expenses and even to set a little aside each month to fund a big dream, like travel, or to begin saving for retirement. One of the greatest refinancing benefits is an often marked improvement in your credit score and rating, which will enable you to make critical life purchases—like a car and a home—at favorable interest rates in the years to come.

So, even if you are in the most dire financial situation, there is still hope through the assistance of a loan refinancing and servicing organization which specializes in defaulted student loans. These organizations will not only help you straighten out your financial problems and ease your hardship, they’ll also help you get your life back on track and give you a newfound peace of mind.

If you have let your student loans slide into default, you’re not alone. The rate of student loan defaults is rising across the county. (See the link at the end of this article for statistical information). Tough economic times have hit most Americans, making it difficult or impossible for many of them to make the monthly payments on their loans.

Help is available, but before we discuss solutions, here’s what you should know about defaulted student loans.

When a student loan falls into default, the Department of Education takes action against you. Often times, it will garnish your wages and your income tax refund, and even withhold social security benefits. The Department can and will take these actions without giving you any prior warning. One month you’re earning enough money to just barely get by, and the next month you aren’t. You and your family could have trouble even putting food on the table.

While the Federal government prefers wage garnishment, it may decide instead to sell your loan(s) to a collection agency. If this happens, it will have effectively given an independent organization with virtually no oversight or regulation free reign to demand payment from you. Often times, these agencies use dubious or completely unethical tactics to harass you and collect the money you owe.

Fortunately, you can get out of this painful situation. Many people with defaulted student loans have found success in the Federal loan rehabilitation program. By entering the program, wage garnishments and demands from collection agencies end. A Federal loan officer assigns you (an often high) monthly payment, which you must make in full and on time for 10 months, no exceptions. If you fulfill that commitment, your loan is moved out of default status, your original monthly payments are reinstated, and you regain the right to apply for the deferment and forbearance programs.

For the many people who can’t afford the payments required by the Federal loan rehabilitation program, there is another option: A private third-party loan consolidation and servicing company specializing in student loans that will end wage and tax refund garnishments and get the collection agencies off of your back, while helping you repay your defaulted student loans and rebuild your credit rating.

With a loan consolidation and servicing company, you refinance your student loan(s) at a new (sometimes higher) interest rate and get a lower monthly payment with a longer repayment term. (Avoid those companies that want you to agree to a variable interest rate, which could raise your monthly payments at any time.)

Like the Federal government, a loan consolidation and servicing company is adamant that you make your monthly payment in full and on time, no matter what. As the current recession proves, however, hard times happen to good people. So, choose a company that has a forbearance program that will help you to keep your loan repayment in good standing if you ever have a sudden and unexpected drop in income.

A defaulted student loan is a serious, and increasingly costly and painful, problem. With the help that a loan consolidation and servicing company provides, however, you can protect yourself and your family from wage garnishment and collection agencies, regain your financial security, repay your debt, and build a brighter future.

Reference-> Default rates rise federal student loans

Having your wages garnished is no laughing matter. Especially in today’s economy, even a slight dip in income can put you in a dangerous situation.

In Illinois, residents who have defaulted on their student loans are finding out just how dangerous, because they are threatened with wage garnishments and other legal actions. If you’re one of these people, you’re not alone. The number of student loans going into default has been rising in recent years in the state and across the country.

What do you need to know about the rules and procedures of Federal wage garnishment?

First, your wages could be reduced without warning. One week you get your normal paycheck, the next week your paycheck is a lot smaller. If this happens, you have the right to request a review hearing. It is vitally important that you immediately find and submit the appropriate request and review form contesting wage garnishment. You should be able to get the correct form from your employer’s Human Resources department, or online from the Federal government.

Second, how much, or what percentage, of your paycheck is the government allowed to take through wage garnishment? According to the Higher Education Act, your employer cannot withdraw any money from your paycheck if your income is less than $217.50 per week. If you make more than that, the government can take 15% of your total wages.

Think of losing 15% of your income for years to come. Most of us would only be able to scrape by year after year after year. Yes, you’d be paying off your student loans, but at what personal and financial cost?

Third, wage garnishment isn’t the only threat to your well-being. In many cases, the Federal government can also withhold all or part of your income tax refund. It can even garnish any social security benefits you might be claiming if you’re disabled, unemployed, or retired, making it almost impossible for you to provide for yourself and your family.

For most of us, this simply isn’t acceptable. Luckily, there is a way that you can completely remove wage garnishments, lower your monthly student loan payments, and even restore your credit.

How? Find a reputable loan refinancing organization that specializes in defaulted student loans. It can help you reclaim your wages and your life.

As the number of people around the country defaulting on their student loans escalates, so does the number of people around the country getting hit with wage garnishments.

Too many people assume that if they have a defaulted student loan, that the government will sell their loan to a collection agency. That’s actually the government’s last resort. Its first choice, particularly for people in certain professions, is to garnish your wages.

How does wage garnishment work? One month you get your normal paycheck, and the next month your paycheck is smaller and it stays smaller until the loan is repaid. That’s all there is to it. The Federal government isn’t obligated to provide any advance warning or to notify you in writing; it simply takes what it wants. But your wages aren’t the only money on the table. The government may also withhold all or part of your annual income tax refund, and even your social security benefits.

How is the garnished amount calculated? Take the current hourly minimum wage standard and multiply it by 30. That gives you around $217. If you’re making less than that a week, your wages can’t be garnished. If you’re making more than that per week, that’s the amount the government can take from your paycheck every month. For many people and their families, that $217 is not disposable income. It is money that is needed to pay rent, buy food, and cover the utilities and thanks to wage garnishment, it’s gone, baby, gone.

Obviously, the first and best line of defense for preventing wage garnishment is to simply not let your student loan(s) slide into default. For too many people, however, that’s easier said than done. If you find that you cannot meet the terms of your repayment agreement, don’t wait: Contact a Federal loan officer immediately, before your loan goes into default. By acting quickly, you may be able to negotiate a new agreement or temporarily lower your payments. You may also be able to request a payment deferment program or a loan forbearance program.

If you have already defaulted student loans, you can still avoid or end wage garnishment. How? Enter the Federal loan rehabilitation program. For a 10-month period, you’ll have to make the (often high) payments dictated by a Federal loan officer and you’ll have to make them in full and on time, no exceptions. If you successfully navigate this repayment period, your loan will no longer be in default and you’ll once again be able to request a deferment or forbearance, if needed.

If the loan rehabilitation program is too rigid for you, or the monthly payments just too high, you have another option: A private loan servicing and consolidation organization that specializes in student loans. With one of these companies, you can stop wage garnishment and lower your monthly student loan payments. You’ll regain your financial security, honor your debt, and even repair your credit rating.

Most people with defaulted student loans don’t realize that they can get additional financial aid to help them through their current financial hardships.

But you can. How?

First, don’t file for bankruptcy. The Federal government and lending institutions take a dim view of anyone trying to manipulate the bankruptcy system just so they can take out even more loans.

Second, change your defaulted student loan status through either a Federal loan rehabilitation program or a private loan servicing/consolidating company that specializes in student loans.

With the Federal loan rehabilitation program, you agree to a strict 10 month scheduled repayment process that will restore the status of your loan. Be warned, however, that the Federal loan officer sets the payment amount based on rigid financial criteria that often doesn’t reflect the reality of your financial situation. But at the end of those 10 months, you regain certain benefits, like the ability to use the Federal deferment and forbearance programs. Of even greater importance, once the loan is rehabilitated and you move forward with your monthly payments, you are free to apply for and receive additional financial aid.

Rather than the Federal loan rehabilitation program, many people prefer to use a reputable private student loan servicing/consolidation company to bring their student loan(s) out of default, because its requirements are not as severe. By working with one of these companies, you can end the demands of collection agencies and wage and income tax refund garnishments.

Of particular importance, your monthly payment amount is reduced significantly. You just pay it over a longer period of time.

By working with a loan service organization, you can often erase any record of Federal debt, which may make it possible to receive additional Federal financial aid.

Many people who have been out of school for years, and have years to go in repaying their student loans, want to return to school to get a higher degree that will help them improve their income. Some people want to return to school to change their careers entirely to raise their income.

By rehabilitating or consolidating their current student loans, they are eligible to get the financial aid they need to get the education they need to create a brighter financial future.

The government does very little to police or oversee the activities of the collection agencies it uses. Thus, some collection agencies feel free to use morally reprehensible and even borderline illegal methods when attempting to collect on debts, such as:

• Using intentionally confusing or misleading documents or demands to solicit personal information from you.
• Determining how much you must pay without any input from you whatsoever. Often, the payment amount is established without any consideration of your current financial hardships.
• Misrepresenting themselves as being part of a governmental agency.

Remember your rights!

• You have the right to privacy.
• Collection agencies are not authorized to provide your information to any third party.
• If you have legal representation, a collection agency is only permitted to communicate with your attorney or law firm.
• Harassing phone calls or attempts at communication with you during odd hours, such as late at night, are forbidden.
• A collection agency has no right to accost you at your place of employment.
• You are protected from stalking and/or persecution.
• Collection agencies are not permitted to intimidate you or abuse their power in any way. Actions like this are in clear violation of the law and you should report them immediately.
• Collection agency employees and their outside contractors must not impersonate anyone else in order to gain information from you. They must clearly identify who they are and state their intentions.

When dealing with collection agencies for defaulted student loans, you have more than rights. You have help.

The first source of help is the Department of Education itself. Re-establish contact with your Federal loan service (not the collection agency) and state that you want to rehabilitate your loan(s). Often, you will have to make your case for loan rehabilitation by providing your financial records, including pay stubs, tax returns, monthly and annual bills, among other documents. The loan rehabilitation process usually takes around 10 months during which you must make monthly payments on time every month, no exceptions, in the amount dictated by the Department. After you have successfully completed this process, your loan status will be restored and you will regain several lost privileges, like loan deferment.

Your second source of help is a private debt consolidation or loan servicing organization that specializes in defaulted student loans. Such a group will keep the collection agencies off your back and help you establish a reasonable repayment plan. The payments will be lower than your original loan payment amount, extended over a longer period of time, and you will lose some Federally-based privileges. But you’ll be free from the stress of harassing phone calls and letters, and better able to honor your debt and restore your credit rating. Sounds like a win-win situation.