About Student Loan Garnishment

What is Administrative Wage Garnishment (AWG)?

Administrative wage garnishment (A.W.G) is the process by which a Federal agency (Dept. of Education) or a third-party given authority by a Federal agency (the collection agencies) may, without first obtaining a court order, order an employer to withhold amounts from the debtor's wages to satisfy a delinquent debt. Dept. of Education considers AWG to be a tool of last resort. Before using AWG, Dept of Education expect its representatives to have attempted to resolve the debt through voluntary means: attempting to secure the balance in full, an approved settlement, or installment payments that are "reasonable and affordable" based on the debtor's individual financial circumstances. Some within the industry may consider this the guaranteed recovery method.

Representatives must consider whether the debtor presents a legitimate defense to the repayment of the debt(s), and whether AWG may be ineffective because the debtor is self-employed or a Federal employee, in which cases the collection agency will recommend litigation or a salary offset.

What is the purpose of AWG?

The purpose of an AWG is to recover the amounts for the Federal taxpayers without the cost of litigation fees. It was created to basically recover the unpaid debts arising from federally supported activities, which include student financial assistance.

What are the debtor's rights in the AWG process?

-To be sent a notice 30 days prior to ED ordering the wage garnishment that explains ED's intention to garnish, the nature and amount of the debt obligation, and the opportunity to inspect and copy records relating to the debt, to object to garnishment to collect the debt, and to avoid garnishment by voluntary repayment on terms agreeable to ED.

-To have the opportunity to inspect and copy Department records pertaining to the debt. (A copy of the original signature left on the promissory note and a payment history)

-An opportunity to present evidence and argument and on any objection by the debtor to the existence, amount, or enforceability of the debt, and to obtain a ruling on the objection.

-An opportunity to prove that the garnishment of 15% of the debtor's disposable pay would produce an extreme financial hardship.

-Having garnishment action withheld by filing a timely request for a hearing, until the hearing is completed and an adverse 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 that which is necessary for the employer to comply with the withholding order.

-An opportunity for a hearing to present and obtain a ruling on any objection that garnishment cannot be used at this time because the debtor is now employed for fewer than 12 months after involuntary separation from the most recent prior employment.