Get Out of Debt Guy

I Previously Rehabilitated My Student Loans and I'm Being Garnished

Posted November 11, 2014

WRAL Reader Question

Dear Steve,

I have 2 student loans that we've struggled with over the years. We went through rehabilitation on them 2 years ago. Unfortunately our finances went south again and I am now being garnished. I've attempted to consolidate but I'm told that's not possible due to the previous rehab.

Are there any options for us out there currently? The reps at ASCI keep tell me that change is coming, but I've not seen anything that might help.


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Dear Tina,

I'm not certain you've been give correct advice. It sounds to me you have federal student loans and are in an Administrative Wage Garnishment. While you can't consolidate your way out of the garnishment there are new rules that went into effect July 1, 2014 that make the rehabilitation process much better.

Under the new process your rehabilitation payment only needs to be a reasonable and affordable payment and acceptable to the Department of Education. I've seen people who qualify for rehab payments as low as $5 per month on top of the garnishment. While rehab used to be nine payments, it is now five.

While in rehab your garnishment will continue till you make the necessary payments.

Once you have successfully rehabed your loans then you will be out of default and eligible to consolidate them and ask for an income based repayment plan.  

Before I go, here are three things you can do right now to tackle your issue. Click here.

Steve Rhode
WRAL Get Out of Debt Guy

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About this Blog:

Steve Rhode has had careers in opthalmology, real estate and as the head of a nonprofit debt counseling firm. On his blog, he offers hard-won, free advice about getting out of debt, consolidation and making the right choices as you manage your money.