Student Loan Wage Garnishments Resume, Prompting Bipartisan Congressional Protection Bill

The Department of Education's decision to restart comprehensive student loan debt collection has triggered significant legislative action in Washington as millions of defaulted borrowers now face administrative wage garnishment without court orders. This renewed collection effort, which began in May 2025, directly impacts an estimated 5.5 million people currently in default, with millions more at risk of falling into delinquency.

For employers nationwide, the return of administrative wage garnishment means increased administrative burden and the complex process of complying with garnishment orders that allow the government to withhold up to 15% of an employee's disposable pay. The collection efforts also include interception of tax refunds and Social Security benefits, creating multiple pressure points for borrowers struggling with debt repayment.

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 bipartisan 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. The legislation reflects growing concern about the fairness and transparency of current collection practices.

Proponents argue that the current administrative wage garnishment system is prone to error and disproportionately harms vulnerable workers already struggling with rising consumer debt and high inflation. The proposed bill mandates not only suspension but also 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.

The legislation also proposes establishing 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. These provisions aim to create stronger accountability mechanisms within the collection system while protecting both borrowers and employers from procedural errors.

As the bill moves through congressional 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 legislation's progress, recognizing that the future of student loan debt collection may soon see fundamental changes. The outcome could reshape how the government balances debt collection with consumer protection in an era of rising household debt burdens.