The government can garnish your wages without first getting a judgment in court. A total of 15% of disposable pay may be garnished. No matter what, you can keep an amount equal to 30 times the minimum wage. The minimum wage as of July 24, 2009 is $7.25/hour. This means that 30 x 7.25 = $217.50 is protected per week. Collection letters will often highlight this power (see sample)
| Example: Joe has weekly disposable pay of $300. Based on the minimum wage calculation, he definitely gets to keep $217.50. The government can then take the lesser of the amount his income exceeds $217.50 ($300 – $217.50 = $82.50) or 15% of his income (15% of $300= $45.00). Since $45.00 is less than $82.50, this is the amount the government can take each week from Joe’s wages. |
“Disposable pay” is the pay remaining after deduction of any amounts required by law to be withheld. The maximum for student loan and all other garnishments is 25% of disposable income.
Challenging Administrative Wage Garnishment
The Department of Education or a guaranty agency must notify you before the garnishment. You must be given the opportunity for a hearing to challenge the existence or amount of the debt and the terms of the repayment schedule. The garnishment cannot go forward if you request a hearing within 30 days of the receipt of the notice. (The time limit is 15 days if you have a FFEL loan). If you request a hearing after that date, the garnishment will usually begin, but you can still stop it later if you win your hearing.
The first and most common defense is that the garnishment would cause financial hardship to you and your dependents. You will have to fill out this form in order to show hardship. (Alert: The site with this official form does not always work. You should contact your loan holder if you need a form to request a garnishment hearing).
Other important challenges include (this is not an exhaustive list):
- You were involuntarily terminated from last employment and have been employed in current job for less than 12 months,
- You have repaid the loan,
- It is not your loan or there is some other reason why you do not owe the money,
- You have already entered into a repayment agreement and are making payments,
- You have filed for bankruptcy and the case is still open or the loan was discharged in bankruptcy,
- The school failed to pay you an owed refund,
- The borrower is dead or totally and permanently disabled,
- The loan is not enforceable, for example because of forgery, or
- You are eligible for a closed school or false certification discharge.
You must submit a request for hearing form to: (Alert: The site with the official request for hearing form is off-line at times. You should contact your loan holder if you need a request for hearing form).
U.S. Department of Education
Chicago Service Center
Attn: Hearings Branch
P.O. Box 617547
Chicago, IL 60661-7547
You may also file a request for hearing on-line. (Alert: This site does not work at all times. You can send the form by regular mail if necessay and always stay alert to the time deadlines for requesting hearings).
The Department of Education provides this explanation about administrative wage garnishment. (The on-line explanation may not be available. The site with general information about default should be working even if the specific information is not available).
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