Defaulted Student Loan Wage Garnishments Return, Prompting Bipartisan Congressional Protection Bill.
Benson, United States – November 21, 2025 / Maryland Wage Garnishment Stoppers /
As federal student loan collections ramp up following a multi-year pause, millions of defaulted borrowers across the nation are now facing the resumption of administrative wage garnishment (AWG), a powerful collection tool allowing the government to seize a portion of a worker’s paycheck without a court order. This renewed collection effort, which began in May 2025, has immediately prompted significant legislative action in Washington aimed at suspending the practice.
The Department of Education’s decision to restart comprehensive debt collection, including the interception of tax refunds and Social Security benefits, directly impacts an estimated 5.5 million people currently in default, with millions more at risk of falling into delinquency. For employers nationwide, this means an increase in administrative burden and the complex process of complying with garnishment orders, which allow the government to withhold up to 15% of an employee’s disposable pay.
In response to the resumption, legislators in both the Senate and the House introduced the “Ending Administrative Garnishment Act of 2025” (S. 1764 / H.R. 3412). This bill seeks to immediately suspend the Secretary of Education’s authority to use wage garnishment for defaulted student loans until significant new borrower protections and administrative safeguards are implemented.
Proponents of the legislation argue that the current AWG system is prone to error and disproportionately harms vulnerable workers already struggling with rising consumer debt. The proposed bill not only mandates a suspension but also calls for critical reforms, including prohibiting garnishment on loans outstanding for more than 10 years, requiring the Department of Education to refund improperly garnished wages within one week, and establishing a process for employers to verify garnishment information quarterly. It also proposes to establish a private right of action, allowing borrowers to sue employers who improperly garnish wages after an order is suspended, and requiring the Department to pay double damages for improper seizures.
“The return of administrative wage garnishment is hitting workers when many are already balancing high inflation and rising credit card debt,” stated [Insert Fictional Expert Name], a [Fictional Title, e.g., Senior Policy Analyst] at the Center for Fiscal Responsibility. “The legislative push in Congress reflects a growing understanding that, while debts must be repaid, the tools of collection must be fair, transparent, and have clear avenues for appeal. For every employer, compliance is now a major focal point. They must carefully navigate these complicated rules, as the risk of improper withholding carries legal and financial penalties.”
As the bill moves through committees, the debate highlights the critical junction between federal debt recovery efforts and employee financial well-being. Stakeholders—from borrowers and consumer advocates to employers and payroll professionals—are closely monitoring the progress of the legislation, recognizing that the future of student loan debt collection may soon see fundamental change.
About the Center for Fiscal Responsibility (CFR)
The Center for Fiscal Responsibility is a non-partisan organization dedicated to researching and advocating for policy solutions that promote financial stability and effective compliance across the U.S. consumer and business landscape. If you need to stop a wage garnishment in MD, click for more information.
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