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Bill Would Ban Lenders From Garnishing College Graduates’ Wages

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Photo Credit: Thinkstock.com

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SACRAMENTO, Calif. (AP) — People who are having trouble repaying student loans from private lenders would get some relief under a bill that has passed the state Assembly.

The legislation by Democratic Assemblyman Bob Wieckowski of Fremont would prevent the lenders from garnishing the wages of those with unpaid debt.

Private lenders are allowed to withhold up to 25 percent of a delinquent borrower’s disposable income. The lawmaker says preventing automatic withholding would encourage lenders to create manageable repayment plans for graduates who find themselves underemployed.

AB233 went to the Senate Thursday on a largely party-line, 50-22 vote. Republican lawmakers opposed it.

Those speaking against the bill said prohibiting lenders from garnishing wages could reduce access to private loans because it would give lenders less certainty that their money will be repaid.

Copyright 2013 The Associated Press.

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