Have Defaulted Student Loans? Know Your Rights!

Do you have federal student loans in default (or for which you have made no payment in 180 days)? As of May 5, 2025, the Department of Education (ED) has restarted its involuntary collection activities against defaulted loans. This means that ED can collect on your defaulted loan without going to court. Involuntary collection activities include the following: 

  • Treasury Offset Notices. Federal cash benefit programs like Social Security Disability Insurance (SSDI), Social Security retirement, and other federal benefits can be garnished by the federal government to repay federal student loans. Tax returns may also be intercepted. You can call 800-304-3107 to find out if you are subject tax return withholding. 

  • Administrative Wage Garnishment. The federal government can collect your wages directly from your employer without going to court to pay defaulted student loans. 

  • Filing Suit. If your student loans are part of the federal student loan program, but held by private lenders, the federal government can sue you in federal district court to seek a judgment against you. 

There are, however, instances when involuntary collection can be challenged: 

  • Proper notice. ED must provide the required notice to begin these processes. If they do not, involuntary collections must stop.  

  • Protected income garnished or offset. The federal government cannot offset Supplement Security Income (SSI). It also cannot take more than 15 percent of SSDI or Social Security retirement payments, not to be reduced below $750.  

  • Mistake. Sometimes, loan servicers, ED, debt collectors, and others involved in student loan lending, processing, and servicing make mistakes. If you believe there is a mistake, there are ways to fix the error. 

  • Suit. If you are sued, you have the right to be served with the complaint and to defend yourself in court. 

There are also ways to end this garnishment and get your loans back on track:  

  • Rehabilitation. One way to get out of default is to contact your loan holder to enter into a rehabilitation agreement. For Perkins loans, you must make the full monthly payments within 20 days of the due date for 9 consecutive months. For Direct and Family Federal Education Loan (FFEL) program loans, you must make 9 payments of a reasonable amount (determined by your loan holder) in addition to your standard minimum payment, within 20 days of the due date over 10 consecutive months. 

  • Consolidation. You can consolidate defaulted federal student loan(s) into a Direct Consolidated Loan. 

  • Settlement. ED might agree to settle your account for less than the agreed upon amount.  

If you have defaulted on your student loans, have a benefit or wage garnishment, receive a notice that ED will take action, or would like help getting your student loan back on track, we can help eligible DC residents for free. 

Questions? You can contact Tzedek DC at (202) 274-7386 or fill out our intake form online.