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Student Loan Change 

Students who have taken out student loans or who are considering taking out student loans would be wise to pay attention to recent student loan changes as well as proposed student loan change that could impact their eligibility, the amount of money they are able to borrow and the repayment terms of their loans.

One of the biggest student loan change that have occurred recently regarding college loans affects the way the government can handle the collection of student loan repayments in the event that you fall behind on paying back your loans. The Department of Education can actually garnish up to 15% of your paycheck if you are in student loan default.

Another student loan change method, the government can use to collect funds owed to it in regards to defaulted student loans  (although technically not a new method) is to withhold income tax refund proceeds. If you have not made any payments on your student loans within the last 90 days, the IRS can be notified and requested to keep all or some of your tax refund in order to cover the amounts you have not paid. Other options for recovering amounts not paid in student loans include the following:

• Holding back federal benefits
• Litigation

Under the Debt Collections Improvement Act, the government is allowed to take federal benefit payments including Social Security Disability and Retirement for federal debts such as student loans. The good news is that the amount of money that the government can take under this recent student loan change is limited. No more than 15% of your income can be taken and under certain circumstances, the government may not be able to touch any of your income at all in order to recover student loan debts.

The Department of Education also has the option of suing individuals who are in default on the student loans. Borrowers should keep in mind that there is no time limit on the option to sue in order to recover funds owed through student loan debts. For more information on recent student loan changes, please visit www.nolo.com.

*What is a PLUS loan.