Administrative Wage Garnishment

Under the Higher Education Act, the Department and guaranty agencies may require employers who employ individuals who have defaulted on the repayment of a student loan to deduct 15% of the borrower's disposable pay per pay period toward repayment of the debt. In addition, the Debt Collection Improvement Act of 1996 permits the Department to garnish up to 15% of disposable pay. Garnishment may continue until the entire balance of the outstanding loan is paid. You should note that wage garnishment is used only for borrowers who refuse to voluntarily repay their defaulted loan and is not used with those borrowers who continue to make regular and timely monthly payments.


Administrative Wage Garnishment (AWG), like Treasury Offset Program (TOP), Federal Salary Offset (FSO), and litigation, is a tool of last resort used by the U.S. Department of Education (the Department) to recover defaulted student loans. Thirty days prior to the issuance of the Order of Withholding, a notice is sent to the borrower advising of the Department's intent to garnish wages, and of their rights and appeal procedures.

The Borrower's Rights and Responsibilities

The borrower has the right to:

  • Be sent a notice 30 days prior to the Department ordering wage garnishment that explains the Department's intention to garnish, the nature and amount of the debt, an opportunity to inspect and copy records relating to the debt, object to garnishment to collect the debt, and avoid garnishment by voluntary repayment;
  • An opportunity to enter into a written agreement under terms agreeable to the Department to establish a voluntary repayment agreement;
  • An opportunity for a hearing to present and obtain a ruling on any objection by the borrower to the existence, amount, or enforceability of the debt;
  • An opportunity for a hearing to present and obtain a ruling on any objection that garnishment of 15% of the borrower's disposable pay would produce an extreme financial hardship;
  • An opportunity for a hearing to present and obtain a ruling on any objection that garnishment cannot be used at this time because the borrower is now employed within a 12-month period after having been involuntarily separated from employment;
  • Having garnishment action withheld by filing a timely request for a hearing, until the hearing is completed and a decision issued;
  • Not to be discharged from employment, refused employment, or subject to disciplinary action due to the garnishment, and to seek redress in federal or state court if such action occurs; and
  • Not to have any information provided to the employer but what is necessary for the employer to comply with the withholding order.

To avoid garnishment of 15% of disposable pay, the borrower must:

  • Negotiate repayment terms acceptable to the Department or the Private Collection Agency (PCA) and ensure that the Department receives the first payment by the response deadline date on the garnishment notice, which is 30 days from the date the garnishment notice was sent;
  • Make a hearing request in writing postmarked no later than the deadline on the garnishment notice;
  • If requesting copies of documents, make a request for a hearing, because requesting document(s) does not delay a garnishment order;
  • Provide proof to support any objection made to the existence, amount, or enforceability of the debt, or a claim of legal exclusion or financial hardship;
  • Pay any expenses he or she incurs to obtain legal representation and to attend an in-person hearing; (All in-person hearings are held at one of the three regional offices: Atlanta, Chicago, or San Francisco. The borrower is responsible for the cost of attending and those of any witnesses to attend on their behalf.) and,
  • Initiate any legal action against his or her employer if the employer discharges, refuses to hire, or takes disciplinary action against the borrower based on the garnishment action.