1. Why do I have to change the garnishment withholding from 10% to 15% of my employee's wages? 

The Department of Education is now issuing withholding orders for up to 15% of the disposal pay of individuals who owe a debt to Education. This withholding is authorized by the Debt Collection Improvement Act of 1996, at 31 U.S.C. 3720D. The Department has issued orders pursuant to authority of section 488A of the Higher Education Act, 20 U.S.C. 1095a, and many such orders remain outstanding and effective. 

2. If someone else already is garnishing my employee's disposable pay, do I still have to comply with the Administrative Wage Garnishment (AWG) Order? 
Whether you must currently withhold to honor Education's order depends on the amount now being withheld from the employee's pay to meet other garnishment orders. Federal law (15 USC §1673) imposes a maximum on how much can be withheld from an employee's pay for garnishment orders; except where the order in question is a family support order, no more than25% of the employee's disposable pay, or the amount the exceeds 30 times the minimum wage, whichever is smaller. If, for example, that employee is currently being garnished for student loan debts under two separate orders for 10% withholding, Education's newly-received order must be honored to the extent of the remaining 5% of the employee's disposable pay. On the other hand, if the prior garnishment(s) account for 25%, then nothing would have to be withheld under the AWG Order, at least until the prior garnishment(s) was satisfied or expired. 

Remember: That same Federal law also protects from garnishment a "floor" level of income equal to 30 times the Federal minimum wage per week. 

Some garnishments expire; AWG withholding orders issued under the authority of section 488A Higher Education Act, 20 U.S.C. 1095a, or 31 U.S.C. 3720D do not expire. 

3. How do I use the Wage Garnishment Worksheet to calculate my employee's wages? 

The Wage Garnishment Worksheet (Standard Form 329C) is enclosed with the Wage Garnishment Order (Standard Form 329B) to assist you in determining the proper amount to withhold. You may use a copy of the Worksheet each pay period to calculate the Wage Garnishment Amount to be deducted from the debtor's disposable pay. You may also use the U.S. Department of Treasury Financial Management Service's calculator to assist in your calculations at http://fms.treas.gov/debt/awg.html#forms

4. If an employer is withholding from a debtor's pay based on a garnishment order served on the employer before our order, or if a withholding order for family support is served on an employer at any time, the employer must comply with our garnishment order by withholding an amount this is the smaller of an amount equal to 25% of the debtor's disposable pay less the amount or amounts withheld under the garnishment order or orders with priority over our order. See the examples below: 

Examples A&B 

Note 1: As explained on the Order and worksheet, the total amount of an employee's wages subject to garnishment of any kind is the lesser of 25% of the employee's disposable pay or the amount exceeding 30 times the minimum wage ($5.15 / hour). 

Note 2: Federal law sets a higher limit on disposable pay subject to garnishment for a child support order. 15 U.S.C. 1673(b)(2). 

Examples A & B are based on an employee earning enough to make 25% of disposable pay the only limit applicable to handling the specific garnishment orders in the examples. 

Answer 

Employer should pay CRS first 20% of the employee's disposable pay, and the remaining 5% of wages available for withholding to USAF. This exhausts the 25% available for withholding (15 U.S.C. 1673(a)(2)). The employer cannot honor any part of the ED order until either of the prior orders are satisfied or cancelled.

Answer 

SHC's order is first in time, thus the Employer should pay SHC the full 25% of disposable pay authorized by 15 U.S.C. 1672(a) until the SHC order expires or the debt is paid in full. The Employer should then pay ED 15%, and FMC the remaining 10% of disposable pay subject to withholding

B. Frequently Asked Questions General Topics. 

5. May I send the garnishment payments electronically? 

No. Not at this time. 

6. Why isn't this student debt or garnishment shown on my employee's credit bureau report? 

Federal law generally bars credit bureaus from reporting negative information on education loan debts more than seven years after the event being reported; on many education loans, default - and, if a guaranteed loan, payment on that guarantee - has occurred more than seven years ago. Credit reports generally do not include specific information on action taken by a creditor to collect a debt, other than entry of judgment. Administrative Wage Garnishments do not depend on a judgment, neither the issuance of a garnishment order nor other collection actions are reported by the Department to credit bureaus, or included in reports issued by the bureaus.

7. Does ED garnishment order take priority over all other garnishment orders? 

No. Federal regulations governing administrative wage garnishment orders require the employer to honor an ED wage garnishment order before any wage withholding order received by the employer after the ED order other than a family support order. If a specific Federal law requires a different priority, that Federal law controls. ED's wage garnishment order remains effective until cancelled, and need not be reissued to remain in effect. 

If an employer is withholding from a debtor's pay based on a garnishment order served on the employer before our order, or if a withholding order for family support is served on an employer at any time, the employer must comply with our garnishment order by withholding an amount this is the smaller of an amount equal to 25% of the debtor's disposable pay less the amount or amounts withheld under the garnishment order or orders with priority over our order. See the examples below: 

Examples A&B 

Note 1: As explained on the Order and worksheet, the total amount of an employee's wages subject to garnishment of any kind is the lesser of 25% of the employee's disposable pay or the amount exceeding 30 times the minimum wage ($5.15 / hour). 

Note 2: Federal law sets a higher limit on disposable pay subject to garnishment for a child support order. 15 U.S.C. 1673(b)(2). 

Examples A & B are based on an employee earning enough to make 25% of disposable pay the only limit applicable to handling the specific garnishment orders in the examples. 

Answer 

Employer should pay CRS first 20% of the employee's disposable pay, and the remaining 5% of wages available for withholding to USAF. This exhausts the 25% available for withholding (15 U.S.C. 1673(a)(2)). The employer cannot honor any part of the ED order until either of the prior orders are satisfied or cancelled.

Answer

SHC's order is first in time, thus the Employer should pay SHC the full 25% of disposable pay authorized by 15 U.S.C. 1672(a) until the SHC order expires or the debt is paid in full. The Employer should then pay ED 15%, and FMC the remaining 10% of disposable pay subject to withholding 

8. Should employers withhold from a sub-contractor's compensation?

No, because a sub-contractor is not an employee of the employer.

9. Should an employer withhold from amounts payable to the employee as per diem reimbursement for travel expenses? 

No. Disposable pay includes only compensation owed to an employee for services rendered by the employee whether termed wages, salary, bonuses, commissions or vacation pay. Per diem payments are not compensation for personal services, but rather reimburse the employee for expenses incurred by the employee in the course of employment, and are therefore not subject to withholding pursuant to a Department garnishment order. 

10. Am I responsible as the employer for withholding on tips received by my employee ? 

If you hold in hand tip money owed to your employee, then you are responsible for withholding from those funds. If you do not have possession of tips, you are not responsible for withholding from those funds. 

11. The Merchant Seamen Protection and Relief Act exempts my employee from your garnishment.

The Merchant Seamen Protection and Relief Act, 46 U.S.C. § 11109, protects seamen and others subject to its protection from garnishment. Although this Act does not specifically address administrative wage garnishment under section 488A of the Higher Education Act, 20 U.S.C. §1095a, or under 31 U.S.C. § 3720D , we believe that this protection applies to garnishments under those authorities.

12. May I refer my employee to the contact person listed in the Department's withholding order? 

No. Prior to issuing any order, ED has already given each debtor an opportunity for a hearing and repayment terms, by notice sent to the best address ED has. The contact person and Internet email address listed on the order is to assist the employers in complying with the withholding order. In addition to assistance provided by the contact person, employer may speak with a Department Loan Analyst at (404) 562-6012 regarding the withholding order. 

Reminder: A telephone call or email does not replace the requirement of completing and returning the Employer Certification (ED-329D) to the Department. Federal regulations (34 CFR 34.21(b)) require you to complete and return the certification within 20 days of receipt. 

Employee Referral: The Department provides each individual an opportunity for a hearing for objections to garnishment, but requires that a request for hearing be made in writing. A request for hearing should be sent to the U.S. Department of Education, ATTN: Hearing Branch, 61 Forsyth Street, Rm19T89, Atlanta, Georgia 30303. Your employee may also access information concerning the hearing process at our website at http://www.ed.gov/offices/OSFAP/DCS/awg.html.

13. I have received an AWG withholding order from a guaranty agency - is a guaranty agency also authorized to garnish employee wages for student loan debts?

Yes, guaranty agencies are authorized by section 488A of the Higher Education Act, 20 U.S.C. 1095a, to garnish employee wages for Federally-reinsured student loan debts. Student loan guarantors may order the employer of such a debtor to withhold up to 10% of the disposable pay of a defaulted borrower to repay the loan. For a list of guaranty agencies, see the "Our Partners" section at the bottom of this web page. If you have a question concerning a guaranty agency, call our office at (404) 562-6013.

14. I am told that my state law forbids wage garnishment, so can't I just ignore the AWG Order? 

No. Federal law, both 20 USC ß 1095a and 31 U.S.C. 3720D, specifically preempt State law, and both authorize administrative wage garnishment. 

15. What are the consequences if I fail to comply?

A non-compliant employer will be liable for, and subject to, suit by the Department to recover any amount that the employer fails to withhold after receipt of the AWG withholding order, plus attorneys' fees, costs, and, in the court's discretion, punitive damages. 

16. Can I impose a fee for administering this? If I can, who pays? 

That depends on the state; some states permit the imposition of a fee or charge on the employee. Federal law does not address the issue. You should check your state's law. 

17. Borrower states he/she handles payroll and will not garnish his/her own salary. 

The borrower is not the employer you are. Your company has refused to comply with the U.S. Department of Education's (ED) wage garnishment order.

18. My company was advised by your attorney not to honor the wage garnishment order. My agency does not garnish employee wages. I was advised by the Comptroller General's Office not to honor wage garnishments. 

Please note that 20 U.S.C. ß 1095a states that the employer's failure to comply with this wage garnishment order will make the employer liable for any amounts that are not so withheld as well as for any collection costs incurred by ED as result of legal action taken. 

19. My employee's salary is currently being garnished to collect on another defaulted student loan held by a Guaranty Agency. I will implement the U.S. Department of Education's wage garnishment order after that garnishment order is satisfied in full. 

Please note that 15 U.S.C. Section 1673 states that salaries may be garnished a maximum of 25% of an employee's disposable pay; therefore, both garnishment orders (total garnishments up to 25% of disposable pay) can be satisfied simultaneously. 

20. My employee's salary is subject to a prior garnishment and my company is only allowed to pay one garnishment at a time. 

If the first in time garnishment results in a withholding of less than 25% of the employee's disposable pay, the U.S. Department of Education's (ED) wage garnishment order is still operable to the extent that no more than 25% of the employee's disposable pay is garnished in total (either single or multiple garnishments). For example, if an employee's salary is already being garnished, but that prior garnishment only garnishes 15% of that employee's disposable pay, ED can collect up to 10% of the remaining salary. 

21. I have deducted the amount given to me on the first order, should I stop garnishing the employee's wages? 

No. Interest and fees continue to accrue on the unpaid principal balance. Your balance will not reflect the interest and fee accrual. 

22. My employee resigned his position and took a job with a new company to avoid garnishment. What should I do? 

If known, please provide ED with the new employment information if available.

23. There is a state law that prevents wage garnishments in the state in which you reside. 

Your objection is not valid because the wage garnishment statute, 20 U.S.C. ß 1095a, expressly preempts any state law. 

24. Michigan (or whatever state objecting) state law does not recognize wage assignments; there must be a court order or levy before a garnishment can occur. 

The federal administrative wage garnishment statute, 20 U.S.C. ß 1095a, expressly displaces any state law to the contrary with respect to student loan garnishments. For your convenience, ED attaches a copy of this statute. Please refer to the language of the statute that reads, '[n] ot withstanding any provision of state law…" 20 U.S.C. ß 1095a(a). 

25. Why does the debt balance shown on the Confirmation Report not appear to reflect the full amount already withheld and paid to ED?

The report amount reflects principal and interest (ED's balance), which includes interest that has accrued since the date of the order, and ED has used some of the amount paid to defray collection costs. Near the end of the garnishment the employer will be notified of the remaining balance. 

26. Where can the borrower/employer call concerning the garnishment overpayment? 

Employers with additional questions about wage withholding for defaulted student loans should contact: Administrative Wage Garnishment Branch, 404-562-6013. 

27. My employee's salary is subject to a prior child support withholding totaling over 25% of his/her salary. What should I do?

Complete and return the Employer's Acknowledgment of Withholding of Wages form or send a letter to us advising us of the situation. We will send a Stop Withholding of Wages Notice for your records. 

28. How do I apply the garnishment to an employee's salary, which varies each pay period? 

Submit garnishment withholding for any pay period exceeding the amount, if any, by which the employee's disposable wages for each workweek in a pay period exceeds thirty times the current Federal hourly minimum wage (currently $154.50 weekly @ $5.15 per hour). 

29. Do I have to complete and return the Employer's Acknowledgment of Withholding of Wages form?

Yes. Under 31 U.S.C. 7701(c), you are required to complete and return the certification within 20 days of receipt. 

30. What is disposable pay and how do I determine my employee's disposable pay for the 15% wage garnishment withholding order?

The disposable pay is your employee's remaining amount of compensation of personal services, whether or not denominated as wages, after the deduction of health insurance premiums, involuntary retirement systems and pension plans (such as teachers retirement), and any amounts required by law to be withheld (includes social security taxes and other withholding taxes, amounts withheld under a court order). See page 7 of the Employer's Handbook for further information regarding the calculation of wage withholding.