The government just garnished $176 million in wages because of unpaid student loans

Despite more programs available to federal student loan borrowers to manage their loans, borrowers are still struggling. In fact, between October 1 and December 31, 2015, private debt collection companies hired by the Department of Education garnished more than $176 million in wages from defaulted student loan borrowers in order to pay back their debts, according to data released last week.

Though the government provides a variety of options to help student loan borrowers manage their payments, it also has extraordinary powers — including wage garnishment — to collect on the debt if a borrower defaults.

There’s not much historical data on how much student loan debt collectors have secured through wage garnishment, so it’s hard to say whether there are fewer borrowers being subjected to wage garnishment than in previous years.

Still, the sheer size of the pot taken from borrower’s wages is “horrifying” said Chris Hicks, an independent researcher who focuses on student debt. “These are people who can’t afford to pay their student loans and they’ve garnished $176 million in three months from them,” said Hicks, who also works as a consultant for progressive organizations. “You have to wonder what conditions people are living in when they’re seeing that much of their wages garnished.

What’s more, the share of total borrowers who should be making payments on their loans, but are defaulting instead, hit its highest level in three years last quarter, according to an analysis of the data released last week by Jason Delisle, the director of the Federal Education Budget Project at New America, a Washington-based think tank.

Both the high levels of wage garnishment and default suggest that despite efforts from the Obama administration to make student loans more manageable for borrowers, a decent number are still struggling.

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[link to www.marketwatch.com]