With the economy more hostile to entry level workers than ever before, even college or professional graduates with promises of easy, profitable employment may find themselves unemployed after long stretches of time. However, if steps are not taken to alert the government or your other creditors then they will take action. When student loans default the creditor does notice, and things will begin to happen.
One of the most unfortunate and unexpected of these consequences involves something called wage garnishment. In this process, after you have failed to make the proper payment for your dept after 270 or 330 days (depending on your plan), and providing that your lender has been making all steps to find and alert you to the situation, the case will go to a state Quarenty agency. AKA, a governmental repo agency.
This Quarenty agency can obtain authorization, under the higher education act of the USA, is authorized to contact the employers of the defaulting party and REQUIRE them to provide 15% of the defaulting party’s pay to the government directly—after taxes and other limiting factors (your disposable pay). Also, in case you work for the government directly, this process could proceed much faster and with less warning.
Fortunately, before this rather drastic and uncomfortable change might occur, the employer must let you know what is about to happen. Also you cannot be fired (although your credit must already be suffering) and there is opportunity for both a hearing, to prove that the garnishment would cause undue poverty for the debtor (if there was a child involved, etc…) and an opportunity for a voluntary repayment plan to be written.