College debt

If your federal loans go into default – defined by the government as failing to make a payment for 270 or 330 days depending on your loan program -- the Debt Collection Improvement Act of 1996 allows the Department of Education to garnish up to 15% of your pay. If retired and receiving Social Security, the government can garnish up to 15% of those payments, too – but if you’re disabled and receiving Supplemental Security Income (SSI), those payments cannot be taken. The IRS also has the ability to take any tax refund you are owed and apply it to your outstanding balance.