Understanding Student Loan Garnishment

Editor’s note: After an extended pause, the U.S. Department of Education is resuming collection of defaulted federal student loans. Beginning May 5, 2025, the Office of Federal Student Aid (FSA) will contact borrowers in default making them aware of the changes and urging them to take steps to make a monthly payment, enroll in an income-driven repayment plan, or sign up for loan rehabilitation. Later this summer, FSA will send required notices beginning administrative wage garnishment.

Wage garnishment (also referred to as “wage attachments”) refers to the process of an employer deducting a portion of an employee’s income for payment of a debt owed by the employee to a third party.

Wage attachments are court orders or orders from a state agency that direct an employer to withhold a specific amount from the employee’s wages and pay it to a creditor. In Texas, wages can be garnished for:

• Unpaid taxes, fines, and penalties
• Unpaid child support and alimony — Texas Family Code states the employer may charge an administrative fee of up to $10.00 per month on child support payments
• Court-ordered child support and alimony, even if not in arrears
• Unpaid federal student loans that have been declared in default — Civil Practice and Remedies Code states the employer may charge an administrative fee of actual cost or up to $10.00 per month, whichever is less

Additional information regarding wage garnishment is found in Title III of the Consumer Credit Protection Act (CCPA).

Student Loan Wage Garnishment

Generally, student loans are either guaranteed by the federal government, including Stafford and Perkins loans, or acquired from private lenders.

The primary difference between the garnishment of federal and private student loans is that the federal government doesn’t need to obtain a court order to garnish wages.

See 20 U.S. Code § 1095a - Wage garnishment requirement for more information.

Wage Garnishment Limits

There are fixed legal limits on the amount of wages that can be withheld depending on the type of debt involved. Maximum wage garnishment is based on an employee’s disposable earnings, which is the employee’s total income after subtracting legally required deductions.

Examples of legally required deductions include federal, state, and local taxes; Social Security contributions; and Medicare payroll taxes.

Insurance premiums, charitable contributions, and retirement contributions (other than those legally required) are not subtracted from total income when calculating disposable earnings.

The maximum amount the U.S. Department of Education may garnish for defaulted student loans is 15 percent of the employee’s disposable income. The Department of Labor Wage and Hour Division provides more information withholding limits in Fact Sheet #30: Wage Garnishment Protections of the Consumer Credit Protection Act.

Deductions for court-ordered garnishments and other wage attachments required by law may take an employee’s hourly rate of pay below the minimum wage because the Fair Labor Standards Act (FLSA) generally treats wage garnishment paid to a creditor as wages paid to the employee for compliance with minimum wage and overtime pay.