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Americans are carrying record levels of credit card debt. And, with the average credit card annual percentage rate (APR) for purchases now averaging 24.28%, the interest on debt can be as crushing as the balance alone.

Getting out from under high-interest debt can seem like a daunting prospect. The good news is that there are ways to make the process more manageable and a lot less overwhelming. While it can take some time, using a mix of smart paydown strategies can help you reduce your debt, lower your interest rates, and put you on the road to debt-free living. Here’s a look at some of the best ways to reduce your credit card debt.

Start by Creating A Budget

If eliminating credit card debt is the destination, creating a budget is like the road map that gets you there. While it may sound like a complicated process, it doesn’t have to be. These simple steps will get you started.

Gather Financial Statements

It might be a little painful to comb through bills and account statements, but the more information you have from the start, the easier it will be to set up a realistic budget. Try to collect the last three months of these statements in digital or paper form:

◦   Mortgage/Rent

◦   Utilities (water, gas, heat, internet, cable, HOA, etc)

◦   Pay stubs

◦   Credit card and auto loan statements

◦   Student loans or other miscellaneous recurring loans and bills

◦   Subscription services (Amazon, Netflix, Spotify, etc)

Taking the time to gather these documents can give you a clearer picture of where your money is going each month. It can also help you spot easy places to cut back on spending, such as a gym membership you no longer use or a streaming service you rarely watch.

Determine Expenses vs Income

Once your finances are all laid out, you can tally up your average monthly income (after taxes) as well as your average monthly spending. Hopefully, the amount you spend each month is less than the amount you bring in each month. You’ll also want to make a list of your usual expenses and divide them into essential and nonessential monthly expenses.

Implement Budgeting Guidelines

A budget is simply a plan for how you will spend your money. Once you see how you are currently spending your money, you may realize that your spending doesn’t necessarily line up with your priorities. There are many ways to look at budgeting, but one easy framework is the classic 50/30/20 budget. It doesn’t require complicated spreadsheets or tricky apps to get started. The 50/30/20 method simply stipulates:

•   Half a person’s take-home pay should go towards “essential spending.” This includes housing costs, health insurance, groceries, utilities, minimum payments on debt, and anything else you need to pay each month.

•   One-third of a person’s post-tax pay should be tagged for “discretionary spending.” This is spending you could cut back on if needed, such as meals out, entertaining, clothing, or a gym membership.

•   Finally, 20% of post-tax income should be set aside for saving and debt payoff. The rest of a person’s paycheck is ideally reserved for retirement, emergency savings, and making debt payments beyond the minimum.

The 50/30/20 budgeting method can work well for beginners because of its simplicity and flexibility. Trying to adhere to the percentages can sometimes show budgeters their blind spots, or perhaps highlight areas where they might need to improve. But, it can also be flexible. Depending on the cost of living in your area and your priorities, you may want to play with the percentages.

Recommended: How to Stop Spending Money

Paying More Than The Minimum

When you have multiple credit card accounts racking up charges and interest, it can sometimes feel overwhelming. You might be unsure which, if any, to prioritize for payoff, and end up just paying the minimum due on every card each month.

But, if you just make the minimum payment due you might be surprised to learn how much more you end up paying in interest as the account balance accrues. Paying more than the minimum amount owed each month could lead to saving in the long run since there’s a smaller balance to charge interest on. SoFi’s credit card interest calculator can give you a general idea of how much you could possibly save on interest by calculating different repayment options.

SoFi’s credit card interest calculator can give you a general idea of how much you could possibly save on interest by calculating different repayment options.

Recommended: All You Need to Know About Credit Card Minimum Payments

Debt Payoff Strategies

Paying off more than the minimum each month is great, but coming up with a payoff strategy could offer a better outcome in the long run. Employing a method that works for your lifestyle could result in things like building momentum, alleviating stress, and possibly making it simpler overall to conquer debt.

There are a number of simple debt-paydown strategies but here are two popular ones to consider.

Snowball Method

Like a snowball rolling down a hill, the snowball method starts with the smallest debt balances first, then builds towards the larger balances. You start by listing your debt balances from smallest to largest, without considering interest rate. You then put extra cash toward the smallest bill, while paying the minimum on all of the others. Once that bill is eliminated, you put extra cash toward the next-smallest bill. You keep the pattern going until all debt is gone.

The snowball method sometimes gets a bad rap because focusing on small debt balances first could mean paying more interest in the long run. But this method can actually have a positive psychological effect. Wiping away smaller debts can give you a sense of accomplishment that helps you power through the debt repayment process.

Avalanche Method

If small wins off the bat don’t matter much to you, then you might turn to the avalanche method. This strategy starts with paying down the biggest interest rate debt first, paying minimums on all other debts. You contribute all free cash to the bill with the highest interest rate until it’s paid down or off. Continue, paying down debt with the next highest interest rate. Keep going until all debt is gone.

This method allows you to save on interest payments over the life of each credit card balance. The downside is that it takes longer to see any “wins.” But, once things start moving, it should have an avalanche effect, with each loan toppling.

Consolidating Multiple Debts

Having multiple bills, due dates, and accounts can lead to confusion over amounts due, resulting in missed payments and late fees. For some, a credit card consolidation loan might help to cut through the confusion by rolling all their revolving debt into one unsecured personal loan.

How can a personal loan possibly help? If you have outstanding amounts owed on multiple cards, you may be able to consolidate all the debt into one personal loan with a single fixed rate payment.

What’s more, unsecured personal loans often come with a fixed interest rate that’s lower than the average credit card rate, which means less interest charges could accrue each month.

Depending on how quickly you pay off a personal loan, you could save money on interest over the life of the loan with a lower fixed APR. Streamlining debt can also lead to more peace of mind, as can having a set term with a final payment date, instead of a revolving debt like a credit card. Rather than having multiple open-ended debts of differing amounts with varied APRs, you end up with one payment a month, with one rate and a payoff date.

Unsecured personal loans aren’t for everyone. While their APRs are generally lower than credit cards, not everyone will qualify for the lowest possible rates. And taking out a personal loan is still taking out additional debt, so it’s important to weigh the ramifications of adding a loan to one’s credit history.

The Takeaway

If you’re struggling with high-interest debt, know you’re not alone. Also know that there are a number of ways you can tackle the problem. A good first step is to look at your current income and expenses, set up a budget, and select a payoff strategy (such as the snowball or avalanche method). You might also consider consolidating your debt to simplify repayment and, ideally, lower your interest rate.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

What is the fastest way to pay off credit card debt?

One efficient way to wipe out credit card debt is to make extra payments beyond the minimum amount, prioritizing cards with the highest interest rate. This approach is known as the avalanche method. Another strategy to consider is the snowball method, which calls for paying off the smallest debts first and then working your way up to the largest ones.

Is it a good idea to pay more than the minimum on credit card balance?

Yes, it’s generally a smart move to pay as much above the minimum payment as possible. Paying more than the minimum can help you save money on interest, pay off debt faster, and improve your credit utilization ratio — which may help boost your credit score.

What is the 50/30/20 rule of budgeting?

The 50/30/20 rule of budgeting calls for 50% of your take-home pay to go toward necessary expenses, 30% for things you want, and 20% for savings or to pay off debt.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOPL-Q225-020

Nondischargeable debt are debts that cannot be eliminated by bankruptcy. Typically, this kind of debt includes child support, alimony, student loans, and some tax bills, among others.

Though on the surface bankruptcy may appear to produce an opportunity for a fresh start, nondischargeable debts prevent it from being a true end-all solution to funds owed. Learn the details here.

What Does Nondischargeable Debt Include?

Nondischargeable debts can include home mortgages, certain taxes, child support, and student loans, and can vary based on the chapter of bankruptcy filed.

A debt may also be considered nondischargeable if a creditor formally objects to a discharge in court and wins.

When a debt is discharged through bankruptcy, the debtor is relieved of any legal obligation to pay it back, and the creditor is prevented from taking any further action to collect that debt. This includes contacting the debtor or filing a lawsuit.

Personal loans, credit card debt, and medical bills are types of debt generally considered dischargeable.

Nondischargeable debt, on the other hand, does not dissolve in a bankruptcy filing. The debtor remains liable for payment even after the filing is complete. These are types of debt that Congress has deemed unforgivable due to public policy.

Types of Nondischargeable Debt

Nineteen categories of nondischargeable debt apply for Chapters 7, 11, and 12 of the Bankruptcy Code. (A more limited list of exceptions applies to cases under Chapter 13.)

Except in unique circumstances, if a debt falls under one of these categories, it is not considered dischargeable.

1. Debt incurred from U.S. taxes or a customs duty.

2. Debt for money, property, or services obtained fraudulently or under false pretenses.

3. Any debt excluded from bankruptcy filing paperwork (unless the missing creditor received prior notice and had ample time to respond to the filing).

4. Debt acquired due to fraud, larceny, or embezzlement while working as a fiduciary.

5. Debt contracted for a domestic support obligation, including child support and alimony.

6. Debt from intentionally harming another person or their property.

7. Tax debt as a result of a fine, penalty or forfeiture that is, at minimum, 3 years old.

8. Student loan debt (unless not discharging the debt would impose an “undue hardship”).

9. Debt incurred due to the death or injury of someone caused by the debtor while operating a vehicle, vessel, or aircraft while intoxicated.

10. Any debts that were or could have been listed in a prior bankruptcy filing, and the debtor waived or was denied a discharge.

11. Debt obtained by committing fraud or misappropriating funds while acting as a fiduciary at a bank or credit union.

12. Debt incurred for the malicious or reckless failure of a debtor to fulfill any commitment to a federal depository.

13. Debts for any orders of restitution.

14. Debt incurred by penalty in relation to U.S. taxes.

15. Any debt to a spouse, former spouse, or child that is incurred through a separation or divorce.

16. Debts incurred due to condominium ownership or homeowners association fees.

17. Legal fees imposed on a prisoner by a court for costs and expenses related to a filing.

18. Debts owed to a pension, profit-sharing, stock bonus, or another retirement plan, as well as any loans taken from an individual retirement annuity.

19. Debt obtained for violating federal or state securities laws, common law, or deceit and manipulation in connection with the purchase or sale of any security.

Recommended: Paying Tax on Personal Loans

How Will Nondischargeable Debt Affect Me?

Nondischargeable debt is just like any other debt in the sense that it must be paid off on time to avoid negative consequences.

If a debt is left unpaid for too long, the creditor may sell the debt to a collection agency, which then may result in any number of the following repercussions:

•   Significantly lowering a credit score

•   Flagging a borrower as “high risk” to future lenders

•   Decreasing the odds of approval for future credit offerings

•   Increasing high-interest rate offers with less favorable terms

•   Adding negative remarks to your credit history

•   Activating a lien against a property or asset

•   Prompting creditors to pursue legal action

•   Enacting wage or asset garnishment

How Can I Resolve Nondischargeable Debts?

Making plans to resolve any outstanding debts as soon as possible is key to managing a credit history and salvaging future credit opportunities. Here are strategies for paying off debts to consider.

Stop Using Credit

The first step toward debt resolution is to stop accruing it. Many people rely on credit cards, with the average American having almost $6,500 in debt as of February 2025, according to TransUnion®, one of the major credit bureaus.

Making a point not to purchase anything that can’t be bought with cash outright can help curb unnecessary expenses. This includes larger purchases that may require financing. Leaving credit cards at home and removing their information from online payment systems can also help remove the temptation of using them.

Create a Budget

According to a 2024 Debt.com survey, 89% of Americans said making a budget helped them get out of or stay out of debt.

A monthly plan including income and expenses can help reveal where extra money might be coming in and where you can cut back on unnecessary spending. A plan will provide a holistic view of spending habits, allowing for larger decisions to be made about how to change habits in order to fit new, debt-focused priorities.

Cutting back on expenses and carefully tracking spending can help reveal extra dollars and cents needed to pay down debts.

Start a Part-Time Job

When paying down debt is a top priority, taking on another job or picking up additional hours at your current one can be extremely helpful.

An extra check here and there can provide funds to make additional payments on debts, helping to dissolve them more quickly. Consider options such as working weekends at a local coffee shop, picking up a temporary gig in food delivery, or freelancing for additional income.

Recommended: 19 Jobs That Pay Daily

Consolidate Debt

Applying for a personal loan is a strategy for managing several debts simultaneously. Though it may seem counterintuitive to take on another loan, a personal loan can be used to pay off multiple existing lines of credit, such as credit cards, and consolidate them into one loan with a single monthly payment and, possibly, a lower interest rate.

In addition to comparing rates, it’s important to make sure you understand how a new loan could benefit you in the long run. For instance, if your monthly payment is lower because the loan term is longer, it might not be a good strategy, because it means you may be making more interest payments and therefore paying more over the life of the loan.

However, a debt consolidation loan could help streamline payments and ease the anxiety that comes with being responsible for managing numerous lines of credit.

Recommended: How to Apply for a Personal Loan

The Takeaway

Nondischargeable debts cannot be eliminated by bankruptcy, and without proper management, they could worsen your current financial situation. Like any other debt, nondischargeable debt must be paid off on time in order to avoid negative repercussions. Creating a plan to handle outstanding debts as soon as possible is a smart choice. A personal loan is one option to consider in this situation.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

What does it mean if a debt is non-dischargeable?

Non-dischargeable debt is debt that cannot be eliminated by bankruptcy.

What type of debt cannot be discharged?

Debts that cannot be discharged in bankruptcy include alimony, child support, most types of taxes, most student loans, and debt resulting from fraud and other criminal activity.

How do I remove discharged debt from my credit report?

If discharged debt is still on your credit report, you will have to contact each of the big three credit reporting bureaus and file a dispute, giving information to verify that the item(s) should be removed.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOPL-Q225-050

Paying for college without your parents’ financial support can feel overwhelming, but it’s entirely possible with the right resources and planning. Whether your family is unable or unwilling to contribute, there are several options available — from scholarships and grants to work-study programs and student loans — that can help you fund your education.

Keep reading to learn more on how to pay for college without your parents’ help, including tips on cutting costs while in school.

Strategies to Help Pay for College Without Parental Support

Finding the resources to pay for college can be a challenge, and if you’re embarking on this journey alone, it can be stressful. Here are some tips that can help you navigate the process and make it feel less overwhelming.

Choosing the Right College

The best college for your situation will likely be one that provides the programs you need to achieve your career goals and has a price tag that you can afford.

Decisions you’ll need to make include:

•   Living at home or in a dormitory or other housing by the college

•   Choosing between a public or private college

•   Picking between in-state and out-of-state colleges

Living at Home

If you can live near the college rent-free, or at low cost, then this is likely the most cost-effective choice. Perhaps you have family members who live near a college and will allow you to live with them while you pursue your education. Or, maybe you could rent a low-cost apartment near a community college or other school that doesn’t require freshmen to live in a dorm.

Considering Private vs Public Colleges

Public colleges are, generally speaking, less expensive than private colleges. Tuition and fees for the 2024-25 academic year averaged $43,350 at private nonprofit colleges and $30,780 at public colleges (for out-of-state residents). Prices get even more reasonable if you attend school in your home state and receive in-state tuition — the average cost of in-state tuition and fees was $11,610.

Generally, in-state universities are more affordable than going out of state. But the difference between tuition for out-of-state and in-state students can vary widely, so check into your colleges of choice for confirmation. You’ll also want to factor in traveling costs for out-of-state options and consider online college programs where you can take classes no matter where you are located.

Starting at a Community College

Completing your first two years of study at a community college is another option that could dramatically reduce the overall cost of college. In addition to less expensive courses, it may be possible for you to live at home, which can cut costs even more. You might then transfer to a four-year college, allowing you to get a degree from that school without paying for the cost for all four years.

💡 Quick Tip: Fund your education with a low-rate, no-fee SoFi private student loan that covers all school-certified costs.

Applying for Relevant Scholarships

Because scholarships don’t typically need to be repaid, they are a valuable tool to help fund your college education. If you’re finishing high school, talk to your guidance counselor about possibilities. There are often local scholarships provided by businesses and civic groups that you can apply for.

These days, you can also find scholarship opportunities online. There are often major-specific opportunities and more general offerings. It’s worth investing a bit of time in researching and applying for scholarships — a couple hours could really be worth it when those scholarship offers start rolling in.

When you find a college scholarship of interest, check the guidelines carefully to ensure you qualify. Also be sure to follow the application instructions carefully, and submit your forms as early as possible within the timeline. Although you can often reuse parts of one scholarship application to complete another, each opportunity typically has unique requirements, formats, and deadlines.

Recommended: What Is a Merit Scholarship & How to Get One

Obtaining Grants to Help Pay for College

Grants for college can come from multiple sources, including state agencies, local organizations, corporations, and more. And as with scholarships, this is money you don’t typically need to pay back. The biggest source of college grant funding comes from the federal government, and one of the best known is the Pell Grant.

Federal grants come in different categories, including:

•   Need-based grants which are based upon financial hardship.

•   Merit-based grants awarded to students who exhibit exceptional scholarship and/or community involvement.

•   Grants awarded to specific groups, including students with disabilities, those from underrepresented groups, veterans, National Guard members, foster care youth, and those who select certain careers.

Obtaining federal grant funding without help from your parents can be challenging, though. That’s because most federal grants require students to fill out the Free Application for Federal Student Aid (FAFSA), which, if you are a dependent student, will be considered incomplete without parental information. In the event that your parents are unable to fill out their portion of the FAFSA, you’ll have to contact your college’s financial aid office and show appropriate documentation that verifies that your parents cannot fill out the form.

In certain circumstances, you can obtain independent student status and complete the FAFSA yourself, but parental refusal to help with FAFSA completion might not be enough to gain this status.

Even if you fully support yourself financially and are no longer claimed as a dependent on your parents’ tax forms, this status may not necessarily be granted. See your guidance counselor if you want to explore obtaining this status.

💡 Quick Tip: Even if you don’t think you qualify for financial aid, you should fill out the FAFSA form. Many schools require it for merit-based scholarships, too. You can submit it as early as Oct. 1.

Applying for Student Loans

As mentioned, students that fund their college educations without assistance from their parents often need to craft a financial aid plan that consists of funding from multiple sources. This may include funding from both the federal government and private lenders.

Applying for Federal Student Loans

Federal and private student loans are available, but most federal loans require a portion of your FAFSA to be completed with parental information, unless you have independent student status.

Effective with the Higher Education Opportunity Act of 2008, college financial aid departments can offer students unsubsidized Stafford loans even if their parental section on their FAFSA isn’t completed, as long as they confirm that parents are not willing to financially help the student or fill out the FAFSA.

Applying for Private Student Loans

You can also apply for private student loans, although, if you don’t have much or any credit history, you may need a cosigner. Private lenders generally evaluate a potential borrower’s credit history, among other factors, as they make their lending decisions.

Adding a cosigner with a strong credit history could potentially help secure a more competitive interest rate. If you aren’t able to find a cosigner, it is possible to apply for a student loan without a cosigner.

Another important note is that private student loans may not offer borrower protections like those offered to federal student loan borrowers, such as the option to apply for Public Services Loan Forgiveness. For this reason, private student loans are generally borrowed as a last resort option.

With determination and a willingness to seek out and accept help, students do find ways to fund their college educations without assistance from their parents.

Recommended: What Percentage of Parents Pay for College?

Cutting Costs While Attending College

Smart budgeting and careful spending can help you stay in line with your means as you pay for college. Cutting costs when possible could allow you to save or funnel more money toward college tuition.

If, for example, you plan to rent a room in a house near your college of choice, you can furnish it in funky, eclectic ways using stylish and affordable finds from thrift stores and garage sales. ​If you’re handy, you can even build your own loft bed and other furniture, with plenty of instructions available online.

Food gets expensive quickly. If you’ll be on a college meal plan, choose one that doesn’t include waste. Or if you’re living somewhere where you can cook your own food, plan thrifty meals in advance and shop in bulk. Watch for a slow cooker at rummage sales, and you can cook plenty of delicious soups and more.

To cut costs on textbooks, shop around to see if there are any used options you can purchase at a discounted rate. If the book you are buying is directly related to your college major, and you plan on saving it for reference in the future, it could be worthwhile to buy the book. If it’s a textbook for an elective class, you could consider renting the textbook which can often be cheaper than buying it brand new.

Working While Attending School

In addition to potentially helping you qualify for financial aid, your FAFSA may qualify you for federal work-study programs. Of course, finding a part-time job that isn’t associated with work-study is also an option.

You will need to determine how many hours per week you can work and still do well in school. And you’ll also need to find a job that is willing to accommodate the work-school balance you require. For example, it’s important to find an employer who will offer flexibility in scheduling during midterms and final exams.

The Takeaway

Students who are planning on paying for college without their parents’ help can choose an affordable college option, apply for scholarships, get a part-time job, and apply for federal student aid. As a dependent student, applying for federal aid may be challenging without your parent’s support, because the FAFSA may be considered incomplete without their information.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

FAQ

What are some cost-effective college options for students without parental financial support?

Students can reduce expenses by attending in-state public colleges or starting at a community college before transferring to a four-year institution.

Are there student loan options available for those without parental assistance?

Yes, students can apply for federal unsubsidized loans and, if necessary, private student loans, though the latter may require a cosigner and often come with fewer borrower protections.

What strategies can help students minimize college-related expenses?

Implementing budgeting techniques, such as purchasing used textbooks, cooking meals at home, and seeking affordable housing options, can significantly reduce overall college costs.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOISL-Q225-024

Car loan wage garnishment can be a stressful financial burden for borrowers who fall behind on payments.

Of course, this is a situation you want to try to avoid. Fortunately, there are steps you can take to help prevent it. This guide will cover what wage garnishment is, when an auto lender is likely to use it, and how to stop wage garnishment for a car loan.

What Is Wage Garnishment?

Creditors may use a method called wage garnishment when you fail to pay off your debts. It’s a legal procedure that allows them to get a court order requiring your employer to withhold a percentage of your earnings to pay off your debt. The employer is required to send the garnished wages to the creditor.

Common causes for wage garnishment include outstanding court fees, medical bills, child support, unpaid taxes, defaulted student loans, and in some cases, car repossession or voluntary repossession.

Can Car Loan Companies Garnish Wages?

If your car has been repossessed, a car loan company can garnish wages in particular circumstances and in certain states. Not all states allow wage garnishment, so check to see if yours does.

How Wage Garnishment Works

If you default on your loan, your lender may repossess your car. To recoup the money you still owe on your loan, the lender will typically sell the car at auction. In the meantime, they may also foot the bill to clean the car and make any minor repairs.

If the lender doesn’t make enough money through the sale of the vehicle to cover the outstanding loan plus any other costs they’ve incurred, you’ll owe what is known as a deficiency. You’re responsible for paying off this amount. If you don’t, your lender may take you to court to obtain a judgment against you that allows them to garnish your wages.

If this happens, the court will send an order to your employer to withhold a certain amount from your paychecks. Your wages will continue to be garnished until the debt is repaid in full.

It’s important to note that federal law prohibits an employer from terminating you if your wages are garnished–up to a point. You can’t be dismissed if you have one wage garnishment order, but that’s where the federal protection ends. State laws may offer further protection, but you’ll need to check with your specific state’s labor department.

How Much of Your Wages Can Car Loan Companies Garnish?

If your state allows lenders to garnish your wages after a car repossession, federal law limits the amount they can take to 25% of your disposable earnings or the amount of disposable earnings you have that exceed 30 times the federal hourly minimum wage — whichever is the lesser of those two.

Some states have a lower limit for wage garnishment. For example, California limits the amount of wages that can be garnished to 25% of disposable income, or 50% of 40 times the state’s hourly minimum wage — whichever is less.

Recommended: How Long Does a Car Repossession Stay on Your Credit Report?

Can You Stop Wage Garnishment for a Car Loan?

You’ll want to avoid having car loan companies garnish wages if you can. For one thing, wage garnishment can be stressful for you and your employer. Even more important, if a lender has resorted to garnishing your wages, it’s likely that some serious damage has been done to your credit score, which can make it more difficult to get credit in the future. Here’s how to stop wage garnishment for a car loan.

Pay Your Bills On Time

The best way to avoid car repossession and possible wage garnishment is to regularly make on-time bill payments. This will also help you maintain a good credit score.

If you encounter financial problems that will make it difficult to repay your car loan, contact your lender immediately. They’d rather not have you default on the loan, so they may work with you to come up with a new payment program to help you get back on track. They could lengthen the term of your loan or break your payments into smaller sums that you pay twice a month, for instance.

If you’re experiencing a more severe financial hardship, you may be able to request a grace period or a deferral on the loan, which allows you to skip a small number of payments. The lender will tack the deferred payments onto the end of your loan.

Recommended: Is an Auto Loan Secured or Unsecured?

Refinance Your Loan

If you’re having trouble making your loan payments on time, consider an auto loan refinance, especially if interest rates have dropped. When you refinance a loan, you pay off your old loan with a new one, ideally at a lower interest rate or more favorable terms. A lower interest rate or lengthening your loan term could reduce the size of your monthly payment, which may help your budget.

Refinancing might be tricky in certain situations, such as with upside down auto loans, for example. If your auto loan is upside down, talk to your lender to see what your options might be. The same is true if you end up having to declare bankruptcy. While it might be possible to get an auto loan after bankruptcy, it will likely be challenging.

Recommended: Pros and Cons of Car Refinancing

Pay Off Your Deficiency

You can stop wage garnishment by paying off the debt in full, including any court fees or interest that has accrued. Once the balance is paid, the lender is required to notify the court and your employer to stop the garnishment.

It’s important to get written confirmation and keep records of the payoff to ensure the garnishment ends promptly. Additionally, negotiating a payment plan or filing for bankruptcy may also halt wage garnishment in certain cases.

Reinstate or Redeem Your Loan

If your car has been repossessed, there are steps you can take to get your car back.

Depending on the state you live in, you may be allowed to reinstate your loan. You’ll have to make all past due payments and pay all costs associated with repossession, such as towing fees. Generally, this needs to happen 10 to 20 days after the car is repossessed. Your lender can give you the specific payment amount and time frame information.

You might also be able to redeem your loan. In this case, you’ll need to pay off the entire balance of the loan plus any costs associated with the repossession. At this point, you’ll own the car outright.

Buy Back Your Car

In some cases, you can buy back your car after it has been repossessed to avoid wage garnishment, typically by paying off the full amount owed, including any repossession fees and past-due payments.

As mentioned above, this process is called “redeeming” the vehicle. Some lenders may also offer reinstatement, where you bring the loan current and cover fees to get the car back. Acting quickly is essential, as the vehicle may be sold at auction if not reclaimed within a certain timeframe.

Recommended: Refinancing With Bad Credit

The Takeaway

Wage garnishment is a situation you want to avoid, if possible. To prevent your wages from being garnished, do your best to make your car payments on time. If you’re experiencing financial distress, reach out to your lender right away to see if they will work with you on a payment plan.

Another option is to explore refinancing your car loan, possibly lowering your monthly payments if you can get more favorable interest rates and terms.

If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.

FAQ

Can a car loan company garnish your wages?

Auto loan lenders can garnish your wages in certain states when your car has been repossessed. Typically, the lender will sell the car to help recoup their loss. If the car sells for less than what you owe on it, plus any expenses the lender incurred during repossession, you’re responsible for paying the deficiency. If you can’t pay it, the lender can go to court to get an order to have your wages garnished.

What is the most car companies can garnish from your paycheck?

Federal law limits garnishment to 25% of your disposable income or the amount of disposable earnings you have that exceed 30 times the federal hourly minimum wage, whichever is less. State laws may set lower limits, so check the rules in your state.

How do I stop wage garnishment for a car loan?

You may stop wage garnishment by paying off your deficiency, which is the difference between your loan balance and the amount your lender is able to get from the sale of your repossessed car.

Photo credit: iStock/AndreyPopov

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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SOALR-Q225-013

Subsidized loans, a type of loan offered by the federal government, used to be available to graduate students. Unfortunately, that is no longer the case. The program that allowed graduate students to receive subsidized loans ended in 2011 by the Budget Control Act.

For now, these loans are only available for undergraduate students. However, there are other loans available to help pay for grad school. Keep reading for more information on subsidized loans and the other options available to graduate students.

What Are Subsidized Loans?

Federal student loans are offered through the U.S. Department of Education to help students cover the cost of higher education. Direct Subsidized Loans are available to undergraduate students who demonstrate financial need. The amount of the loan is determined by the school you are applying to.

The Department of Education pays all interest on subsidized loans while you are in school at least half-time, during the six-month grace period after you leave school, and during periods of deferment. Outside of these periods, the borrower is responsible for making all principal and interest payments.

Subsidized vs Unsubsidized Loans

Federal Direct Unsubsidized Loans, on the other hand, are available to undergraduate and graduate students. Students do not have to demonstrate financial need to qualify for these loans.

The loan amount is still determined by your school, and the interest starts accruing the moment the loan is disbursed.

For graduate students, the aggregate loan limit is $138,500, of which no more than $65,500 may be in subsidized loans. What’s more, the aggregate limit also includes whatever student loans you may have from your time as an undergraduate.

When you reach the aggregate loan limit, you will not be allowed to borrow any more money in federal student loans. However, if you are able to pay off some of your loans, you may be able to borrow again up to the aggregate loan limit.

Interest rates for both types of loans are set by the federal government each year. For the 2024-25 academic year, the interest rate for undergraduate borrowers is 6.53% for Direct Subsidized Loans and Direct Unsubsidized Loans. The interest rate for graduate borrowers for Direct Unsubsidized Loans is 8.08%. The interest rate is fixed over the life of the loan.

Alternatives to Subsidized Loans

In addition to unsubsidized loans, there are other loans available from the government, plus private sources that can help you pay for grad school.

Grad PLUS Student Loans

Grad PLUS student loans, also known as Direct PLUS Loans, are another federal loan available through the Department of Education. Grad PLUS Loan requirements include that you must be a graduate student enrolled at least half-time at an eligible school. Your program must lead to a graduate degree, a professional degree, or a certificate. You meet the basic eligibility requirements for federal student aid and must not have an adverse credit history.

Under the Grad PLUS program, you are allowed to borrow the cost of attendance less any other financial aid. You don’t have to repay the loan until six months after you leave school or drop below half-time enrollment.

Interest rates on the loan are fixed. Any Direct Plus Loans disbursed after July 1, 2024, carry an interest rate of 9.08%.

To apply for federal student loans, you’ll need to fill out the Free Application for Federal Student Aid (FAFSA®). Your school will use the information on this form to determine how much aid you are eligible to receive and present it to you in an offer letter. The offer letter will also give you information about grants and work-study programs you may be eligible for.

Recommended: Guide to Grad Plus Loans

Private Loans

Private student loans are available through banks, credit unions, and other private institutions. The individual lender will determine the amount you can borrow, terms of the loan, and the interest rate based in large part on financial factors such as your income and your credit score.

Private loans may allow you to borrow beyond the federal limits imposed on federal loans, or help you pick up the slack if you didn’t qualify for enough federal funding. However, they may lack protections afforded to federal student loans, and as a result, are generally thought of as a last-resort option when paying for grad school.

Personal Loans

Personal loans are also available through private lenders. Borrowed funds can be used for practically any purpose, which means they could potentially be used to cover expenses beyond tuition. As with private loans, the amount you can borrow will depend on your financial history or that of a cosigner.

How Much Can You Borrow for Graduate School?

The amount you can borrow for graduate school will depend on the types of loans that you use.

Grad PLUS student loans potentially allow you to borrow up to the full cost of attending your program, less any other financial aid.

However, unsubsidized loans limit your aggregate borrowing to $138,500, and that’s including any federal loans that you took out as an undergraduate.

Borrowers who are enrolled in certain health profession programs may be subject to a higher aggregate limit for Direct Subsidized Loans, and should talk to their school’s financial aid office.

Private student loans may limit borrowers to the cost of attendance. Policies will likely vary by lender.

Personal loans may allow you to borrow as much as $100,000 with no limitations on how the money must be spent. Again, specific policies may vary by lender.

Recommended: Graduate Student Loan Limits

The Takeaway

Federal subsidized loans are no longer available to graduate students. In the meantime, graduate students have other options, including federal unsubsidized loans, Grad PLUS Loans, loans from private lenders, or a combination of the above to help pay for school.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

FAQ

Does the U.S. Department of Education offer subsidized loans for graduate students as part of financial aid packages?

No, the U.S. Department of Education does not offer subsidized loans for graduate students. Subsidized loans are only available to eligible undergraduate students. Graduate students may still qualify for federal financial aid through options like Direct Unsubsidized Loans and Grad PLUS Loans, which begin accruing interest immediately.

Are Grad PLUS Loans subsidized loans?

Grad PLUS Loans are not subsidized, which means that interest accrues while the student is in school.

Can you pay off subsidized loans before graduating?

You can pay off federal subsidized loans before you graduate without paying any penalty. Note that federal subsidized loans do not accrue interest while you are in school.

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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Photo credit: iStock/Kseniia Ivanova
SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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