Employers

Employers who have received an Order for Withholding of Wages for an employee should read the Employer's section of our site.

Borrowers

Administrative Wage Garnishment (AWG), like Treasury Offset (TOP), Federal Salary Offset, and litigation, is a tool of last resort used by the U.S. Department of Education (ED) 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 ED?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 ED ordering wage garnishment that explains ED'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 ED 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 ED or the Private Collection Agency (PCA) and ensure that ED 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.

 From 488A of the Higher Education Act of 1965, as amended, 20 U.S.C. Section 1095a.

The AWG Hearing Process

ED uses garnishment to collect after attempts to obtain voluntary payments have failed. After numerous attempts to convince the borrower to repay his or her defaulted student loan(s) held by ED, an ED employee or representative [Private Collection Agency: (PCA)], after verifying the borrower?s address and place of employment, sends a series of notices/letters that warn the borrower to enter repayment or ED will use garnishment to recover that debt.

ED starts the garnishment process itself by sending the borrower a Notice of Intent to Garnish (SO2 Letter), which gives the borrower 30 days to file a request for review of objection(s) to the garnishment action and states his rights under the process. If the borrower?s request is filed timely (within 30 days of the date of SO2 Letter), ED suspends further action until ED has considered and ruled on all objection(s). However, if the request is filed untimely, ED does not suspend action while ED considers the objections, and proceeds to issue a garnishment order to the employer. However, if ED has not issued a decision regarding the objections within 60 days of the hearing request, ED will notify the employer to suspend garnishment until ED has issued a decision ruling that garnishment should be pursued to enforce the debt. If ED determines that the objections raised in the request for review are not proven, ED then notifies the employer to resume withholding pursuant to the garnishment order.

The debtor may object to garnishment on a number of grounds:

1. The debtor may object that the debt does not exist, or is not owed in the amount claimed by the government.
2. The debtor may object that applicable law bars the government from enforcing the debt as claimed, or prevents the government from enforcing the debt by garnishment action at the present time.
3. The debtor may object that garnishment in the amount or rate stated in the Notice of Intent to Garnish would create an undue financial hardship for the borrower and his or her family.

ED uses contractors to assist in the garnishment process. Contractors may, for example, assist by gathering documents and information needed to evaluate the debtor?s claims, and may negotiate repayment agreements on behalf of ED. Only the ED hearing official has authority to determine the validity of the debtor?s objections to garnishment, and only ED issues the final decision on the merits of those objections.

Borrowers may object to the proposed garnishment action on grounds such as the following:

A) Validity of the claim as stated in the notice:

a) The loan was previously paid or settled in full
b) The loan is currently in repayment or the debtor has entered into and complied with the terms of a repayment agreement
c) The amount claimed to be owed on the loan is incorrect because some payments have not been credited
d) The loan was discharged in bankruptcy
e) The loan is unenforceable due to
f) The loan may be subject to discharge in whole or in part due to:

1. Closure of the School attended by the borrower with the loan proceeds
2. Ability to Benefit falsely certified by the school that approved the loan.
3. Unauthorized Signature or Forgery of the borrower?s name on the promissory note or disbursement checks.
4. Public Service Cancellation (Perkins loans only)
5. Unpaid Refunds owed by the school attended by the borrower with the loan proceeds.
6. Death or permanent and total disability of the borrower.

B) Financial Hardship: garnishment of fifteen (15%) percent of disposable income will an undue financial hardship on the borrower or family.

C) Current enforceability of the claim is barred by law:

1. The debt cannot be enforced at this time because the borrower has filed for relief in bankruptcy and the automatic stay is still in effect.
2. The borrower has been reemployed within the past 12 months after being involuntarily terminated from the previous job.

The borrower is responsible for providing documentation or evidence to substantiate any objection(s) raised in defense to the enforcement of the debt.

All AWG Request For Hearing forms must be submitted in writing to the following address:

U.S. Department of Education
Chicago Service Center
Attn: Hearings Branch
P. O. Box 617547
Chicago, Illinois 60661-7763