United States May Withhold Wages From Workers Who Failed to Complete a Required Procedure

United States government can order employers to withhold up to 15% of the available wages of workers with federal student loans in default who did not bring their debt current. The measure, known as wage garnishment, is applied without the need for a prior court order.

The authority belongs to the Department of Education (ED), which can direct the withholding to the employer. The deduction continues until the defaulted debt is fully paid off or removed from that status, and it remains in effect as a collection tool for unpaid loans.

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What does wage withholding mean, and who does it affect?

The garnishment allows up to 15% of each affected worker’s available wages to be deducted to collect the overdue debt. Before applying it, the ED must send a 30-day advance notice detailing the amount, the nature of the debt, and the worker’s rights.

That notice also informs the worker about the possibility of reviewing the records, objecting to the withholding, or avoiding it through a voluntary payment. The law protects the worker: the employer cannot fire them, deny them employment, or punish them for the garnishment, and may only receive the minimum information necessary to comply with the order.

How can the wage deduction be stopped?

The worker has two ways to avoid the 15% withholding. The first is to negotiate an acceptable payment agreement with the creditor and make sure the ED receives the first installment within 30 days from the date of the notice. The second is to request a hearing in writing.

The hearing request must be mailed with a postmark within 30 days of the notice and allows specific objections to be raised:

• That the debt does not exist, that the amount is incorrect, or that it is not enforceable.
• That the 15% deduction would cause extreme financial hardship.
• The garnishment does not apply because the worker has worked less than 12 months after a previous involuntary job separation.

The decision is usually made within about 60 days of when the request is received. If the worker wins the hearing, the wages are not garnished for 12 months, or the amount is reduced; if they lose, the full 15% deduction applies. Those who do not know who their creditor is can contact the ED’s Default Resolution Group.