Feds will start garnishing wages for hundreds of SC residents this week

South Carolinians who have struggled to keep up with student loan payments might soon have another thing to worry about.

Collection payment notices are being sent by the Trump administration to defaulted student loan borrowers across the country this week, after more than a five-year pause since the Covid pandemic.

The Department of Education announced last year that it would resume its collections and now the time has come to pay up.

Across the nation, there are around 5.5 million borrowers currently in default, according to a November report from the American Enterprise Institute, a public policy think tank.

South Carolina has a higher proportion of indebted student borrowers, and student debt per borrower is also higher than the national average, according to data from the Education Data Initiative.

Student loan debt in South Carolina totals to $30 billion, carried by nearly 775,000 student borrowers. The average student loan debt is $38,715, which is a little lower than New York’s average student loan debt of $38,751.

With high student debt numbers, South Carolina could see a significant number of student borrowers forced to give up part of their wage.

Here’s what you should know:

What is wage garnishing, and how does it work?

Once a loan is defaulted, the federal government can order your employer to withhold up to 15% of your pay after deductions to collect your debt. This continues until the debt is paid or removed from default.

The Department of Education must send a written notice at least 30 days in advance before they can do so. It will explain how much debt you’re in, the amount they will withhold from your paycheck and how you can move forward.

Who is affected and where?

A borrower can be subject to wage garnishing when loan payments are not paid within 270 days. As soon as that happens, the entire loan becomes due immediately.

Student loan default rates vary across South Carolina colleges, according to federal data summarized by CollegeRaptor. The Medical University of South Carolina in Charleston has a 0.4% default rate, which is the lowest in the state. Morris College in Sumter holds the highest default rate of 27.2%.

The University of South Carolina has a 3.2% default rate and Clemson has a 2.9% default rate.

How do you get out of default?

There are several ways to get out of default.

Although not practical for most borrowers, paying the loan in full is an option.

If that’s not possible, loan rehabilitation takes months to complete, but doesn’t add interest or collection costs to the loan and allows the record of the default to be removed from your credit history. Your credit history will still show late payments that were reported by the loan holder before the loan went into default.

Loan consolidation is another option that turns your defaulted student loan into a new loan with interest and collection costs added. However, it won’t remove the defaulted loan from your credit history.

Who can help?

To see if you’re in default, contact your loan servicer.

Borrowers can log onto StudentAid.gov to look at their student loan status as well as their options to repay debts.

Some SC borrowers can find student debt relief options at South Carolina Student Loan.