Potentially Stopping Wage Garnishment

• Have you received a “Notice Prior to Wage Withholding” letter from us, and you want to discuss what options may be available to you?  
• Is your employer currently withholding a portion of your wages to pay off your defaulted federal student loan?

If so, we may be able to help you. Call us. Our account representatives are here to review your account and discuss possible solutions for you.

Do you want to learn more about Administrative Wage Garnishment?  If so, read below.


What is Administrative Wage Garnishment?

Administrative Wage Garnishment is a concept that is unique to federal student loans and allows the Department of Education or Guaranty Agency to direct an employer to withhold a portion of your earnings and apply those withholdings to the balance of an outstanding student loan that is in default.  If the loan holder follows a specific process – an “administrative” process – the loan holder is allowed to directly issue a wage withholding order directly to the borrower’s employer.  

Your loan holder may turn to this option when your student loan is in default and you have not agreed to a voluntary payment plan, loan rehabilitation, or loan consolidation.

At least 30 days before the administrative garnishment process begins, we, on behalf of our client, will mail you a notice called a “Notice Prior to Wage Withholding.”  This notice describes your student loan account, informs you of your loan holder’s intention to garnish your wages to pay off the defaulted account, and provides an explanation of your rights.  If you do not agree to a payment arrangement for your loan or make a written request a hearing on the potential garnishment, your loan holder then has the ability to independently issue an “Order of Wage Withholding” instructing your employer to withhold a portion of your disposable pay to satisfy your defaulted federal student loan.

Things You Need to Know About Administrative Wage Garnishment

  • Administrative Wage Garnishment is considered an involuntary payment method.
  • Unlike other types of wage garnishment, such as child support, Administrative Wage Garnishment of student loan debt does not require a civil lawsuit or court order.  If your loan holder follows the Administrative Wage Garnishment process, your loan holder has the authority to independently issue the Order of Wage Withholding without going to court. 
  • Federal law allows the Department of Education or Guaranty Agency holding your loan to issue an Order of Wage Withholding to your employer.  This order will direct your employer to withhold up to 15% of your disposable income directly from your paycheck and apply those funds to the unpaid balance of your defaulted student loans. 
  • Since this is an involuntary payment method, the money withheld does not count as a qualifying payment for any voluntary payment program and your credit report will continue to reflect the default.
  • In addition Administrative Wage Garnishment is an involuntary payment method and therefore does not prevent you from becoming certified for Tax Offset.