California Bill Would Stop Wage Garnishments for Private Student Loans

StudentLoans_iStockA bill introduced in the California legislature (AB233) would prohibit wage garnishments if the underlying judgment was for private student loan debt. The bill, introduced by Assembly Member Bob Wieckowski (D – Fremont), would mean that private student loan lenders couldn’t come after the wages of students who could no longer pay their loans.

The Current Law

Right now, a private student loan lender can sue a student who is delinquent on loans. After getting a judgment, the lender can garnish up to 25% of the former student’s wages (or less in some instances). For details, see California Wage Garnishment Limits.

(To learn how wage garnishment works, see Nolo’s Wage Garnishment topic area.)

Which Loans Would Be Subject to the Wage Garnishment Ban? 

If the bill becomes law, it would not affect the ability of the federal government to garnish wages for the collection of federal student loans. Federal loans are those that are made or guaranteed by the federal government. Examples include Stafford Loans, Direct Loans, and PLUS Loans. Private student loans are those made by private lenders, not the government. (To find out if your loans are federal or private, see Nolo’s article What’s the Difference Between Private and Federal Student Loans?)

If you are struggling under a mound of student loan debt, visit our Student Loan Debt area for articles on government repayment plans and other ways to handle the debt.