Student Loan Wage Garnishment Laws by State 2026

Editorial Notice – Employer Information
The following section summarizes general employer obligations described in federal and state statutes, court forms, and agency guidance related to wage garnishment processing. This information is provided for general informational purposes only and does not constitute legal, payroll, or compliance advice.

Responding to Garnishment Orders

Employers who receive employer wage garnishment orders are legally required to comply. Employer wage garnishment processing involves specific legal duties:

Employer’s Legal Duties:

1. Timely Response:

• Must respond within timeframe specified in order (typically 10-20 days)
• Must complete and return “Answer to Garnishment” form
• Failure to respond can result in liability for full debt amount

2. Accurate Calculations:

• Calculate disposable earnings correctly
• Apply federal and state limits properly
• Document calculations
• Maintain records

3. Begin Withholding:

• Start withholding on schedule specified in order
• Typically begins with first paycheck after deadline
• Continue until debt paid or order terminated

4. Remit Funds:

• Send withheld amounts to creditor or court
• Follow instructions in garnishment order exactly
• Remit on schedule (monthly, bi-weekly, etc.)
• Include required documentation

5. Notify Employee:

• Provide copy of garnishment order to employee
• Explain withholding amount and schedule
• Inform employee of exemption rights

6. Prioritize Multiple Garnishments:

• Follow federal and state priority rules
• Ensure total does not exceed limits
• Process in correct order (child support first, then taxes, then others)

Calculation Requirements

Step-by-Step Employer Calculation:

While RemoteLaws.com does not provide a wage garnishment calculator tool, employers can follow this manual calculation process:

Step 1: Determine Gross Pay Total compensation for pay period before any deductions.

Step 2: Subtract Legally Required Deductions

• Federal income tax withholding
• State and local income tax withholding
• Social Security tax (FICA employee share)
• Medicare tax (employee share)
• State unemployment insurance (if employee-paid)
• Mandatory state retirement (if required by law)

Result = Disposable Earnings

Step 3: Apply Garnishment Formula

For Weekly Pay Period (example):

• Calculate the wage garnishment percentage: 25% of disposable earnings
• Calculate disposable earnings minus $217.50 (30 × federal minimum wage)
• Use LESSER amount

For Other Pay Periods: Use corresponding multiplier from federal table.

Step 4: Check State Law If state law results in LESS garnishment, use state calculation instead.

Step 5: Verify Maximum Wage Garnishment Limits Ensure total of all garnishments does not exceed the maximum wage garnishment limits allowed by federal and state law, considering priority rules.

Example Calculation:

Employee paid weekly:

• Gross pay: $800
• Federal tax: $80
• State tax: $30
• Social Security: $49.60
• Medicare: $11.60
• Disposable earnings: $628.80

Federal calculation:

• 25% of $628.80 = $157.20
• $628.80 – $217.50 = $411.30
• Garnishment: $157.20 (lesser amount)

If employee in Massachusetts:

• 15% of gross ($800) = $120
• Disposable minus (50 × $15 MA minimum) = $628.80 – $750 = cannot use this calculation
• Garnishment: $120 (Massachusetts law more protective)

Record Keeping Requirements

Employers must maintain detailed records:

Records to Keep:

• Copy of garnishment order
• Garnishment calculation worksheets
• Dates and amounts withheld
• Dates and amounts remitted
• Employee notifications
• Correspondence with courts/creditors

Retention Period: Federal law: minimum 3 years State requirements may be longer.

Source: Fair Labor Standards Act record-keeping requirements; state statutes

Employer Liability

Employers face liability for:

1. Failure to Honor Valid Garnishment:

• Can be liable for FULL AMOUNT of judgment debt
• Court may hold employer in contempt
• Additional penalties and attorney fees

2. Over-Garnishing (Taking Too Much):

• Liable to employee for amounts improperly withheld
• Potential CCPA violations
• Employee can sue for damages

3. Wrongful Termination:

• Firing employee for garnishment for one debt
• Federal penalties: up to $1,000 fine and 1 year imprisonment
• Employee lawsuit for wrongful termination
• Back pay and reinstatement

4. Calculation Errors:

• Must correct errors promptly
• May owe refunds to employee
• Potential liability if errors harm employee

5. Failure to Remit:

• Taking money from employee but not sending to creditor
• Can be liable for full amounts withheld
• Criminal charges in some cases

Employer Requirements:

• Designated payroll personnel for garnishment processing
• Garnishment calculation systems
• Detailed documentation and record-keeping
• Timely response to orders
• Access to legal resources for complex situations
• HR staff training on garnishment compliance

Fees Employers Can Charge

Some states allow employers to charge administrative fees for processing garnishments.

Typical Allowable Fees:

• California: Up to certain dollar amount per garnishment
• Other states: Vary widely, from $0 to $25+ per pay period

Limitations:

• Must be specified in state law
• Cannot exceed statutory maximum
• Cannot be deducted from protected earnings
• Some states prohibit fees entirely

Source: State garnishment statutes

After Garnishment Notice Received (Within 30 Days)

1. Request Hearing

You have 30 days from notice date to request hearing

Valid reasons to request hearing:

• Loan is not yours (mistaken identity)
• Loan already paid or not in default
• Bankruptcy discharge
• School closure discharge eligibility
• False certification
• Identity theft
• Financial hardship

How to request:

• Call Default Resolution Group: 1-800-621-3115
• Submit request online: myeddebt.ed.gov
• Mail written request to address on garnishment notice

Source: 34 C.F.R. § 682.410(b)(6); Department of Education

2. Enter Voluntary Repayment Agreement

Within 30-day notice period:

• Contact Department of Education
• Negotiate affordable monthly payment
• Agreement must be in writing
• Stops garnishment if agreement completed before withholding begins

Source: Department of Education Default Resolution Group

3. Financial Hardship Request

Criteria:

• Garnishment prevents payment of basic living expenses
• Demonstrate urgent financial crisis:
  • Eviction or foreclosure notice
  • Utility shut-off notice
  • Medical emergency
  • Other documented crisis

Process:

• Submit Financial Disclosure Statement
• Provide documentation of hardship
• Request submitted within 30 days

Result if approved:

• Temporary suspension (typically 6-12 months)
• Garnishment may resume after hardship period
• Debt remains

Source: Student Loan Borrower Assistance

After Garnishment Begins (Withholding Already Active)

1. Loan Rehabilitation (Most Common)

Requirements:

• Make 5 consecutive monthly payments under rehabilitation agreement
• Payment amount based on discretionary income
• Payments must be on time

Process:

1. Contact Default Resolution Group: 1-800-621-3115
2. Complete income verification
3. Agree to monthly payment amount (typically 15% of discretionary income)
4. Make 5 consecutive payments
5. After 5th payment posts: Government must remove wage garnishment

Timeline:

• Typically 5-6 months to complete
• Garnishment CONTINUES during rehabilitation
• Garnishment STOPS after 5th payment

Benefit:

• Removes loan from default
• Restores eligibility for deferment, forbearance, and repayment plans
• Default removed from credit report after rehabilitation

Limitation:

• Can only rehabilitate each loan once
• If default again, rehabilitation not available

Source: Federal Student Aid; 34 C.F.R. § 682.405

2. Loan Consolidation

Note on Active Garnishment: Consolidation is not available once garnishment is active

Exception: Can consolidate if:

• Garnishment has been lifted through another process first (rehabilitation, repayment agreement, hearing decision)
• Then consolidation becomes available

After June 30, 2026:

• Consolidation loans subject to new RAP rules
• Limited access to income-driven plans
• Parent PLUS borrowers lose access to all IDR plans

Source: Federal Student Aid; OBBB Act

3. Pay in Full

Paying entire defaulted balance stops garnishment immediately upon payment.

Context:

• Full payment often unrealistic for borrowers facing garnishment
• Loan rehabilitation provides alternative requiring lower monthly payments over time

Bankruptcy and Student Loans

General Rule: Student loans are generally NOT dischargeable in bankruptcy

Exception: Undue Hardship Discharge

Requirements (Brunner Test – most courts):

1. Cannot maintain minimal standard of living if forced to repay
2. Hardship will persist for significant portion of repayment period
3. Made good faith effort to repay

Result:

• Difficult to prove
• Requires adversary proceeding in bankruptcy court
• Success rate historically low (but improving in recent years)

Bankruptcy and Garnishment:

• Filing bankruptcy triggers automatic stay
• Garnishment must stop immediately
• May provide temporary relief while case pending

Source: 11 U.S.C. § 523(a)(8); U.S. Courts Bankruptcy Information