Administrative wage garnishments allow the government to 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.
Example: Judy 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 Judy’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 Garnishments
The Department of Education or a guaranty agency if you have a commercially held FFEL loan 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. If you request a hearing after that date, the garnishment will usually begin, but you can still request a hearing and stop the garnishment if you win your hearing. The government must issue a decision on garnishment appeals within 60 days. If the government misses the deadline, garnishment should not begin until there is a decision.
The Department of Education web site provides basic information about administrative wage garnishment.
The most common response is that the garnishment would cause financial hardship to you and your dependents. You will have to fill out a form in order to show hardship. The Department no longer makes these forms available on the public section of the web site. The Department says that borrowers must log into myeddebt.ed.gov to obtain these forms (We have requested information from the Department about why the forms are no longer publicly available, but have not heard back yet. Stay tuned!)
Other important challenges include (this is not an exhaustive list):
- You were involuntarily terminated from last employment and have been employed in your 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 (This should include defense to repayment for school-related claims), or
- You are eligible for a closed school or false certification discharge.
You must submit a request for hearing form to:
U.S. Department of Education
Attn: AWG Hearings Branch
P.O. Box 5227
Greenville, TX 75403-5227
**Check the form to make sure that this address has not changed. The form may also have changed.