If a student receive a direct deposit refund from a school due to a Stafford loan, is the money protected from being garnished by creditor?

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If a student receive a direct deposit refund from a school due to a Stafford loan, is the money protected from being garnished by creditor?

Student is unemployed and uses money to pay for books, rent, and living expenses.

Asked on January 5, 2012 under Bankruptcy Law, Michigan

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Good question. If you have various creditors seeking money from you for unpaid bills or judgments, the direct deposit refund from your school concerning a "Stafford Loan" is not exempt from being levied upon once the money is placed in your own separate savings or checking account.

With that in mind, I would have the refund check sent to you directly for you to do what you need to do with it for payment of your school expenses. Possibly you can have the refund check placed in your parents' checking account or some trusted friend who would issue checks for school expenses on your behalf.


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