Congress Moves to Stop Student Loan Wage Garnishments After Collections Resume

The resumption of administrative wage garnishment for defaulted student loans has triggered significant bipartisan legislative action in Congress. Following a multi-year pause, the Department of Education has restarted comprehensive debt collection efforts that now impact approximately 5.5 million defaulted borrowers nationwide. This powerful collection tool allows the government to seize up to 15% of a worker's disposable pay without a court order, creating immediate financial pressure on vulnerable households already struggling with inflation and consumer debt. The renewed collection activities also include intercepting tax refunds and Social Security benefits, creating a multifaceted financial challenge for millions of Americans.

In direct response to these developments, legislators from both parties have introduced the "Ending Administrative Garnishment Act of 2025" (S. 1764 / H.R. 3412), which seeks to immediately suspend the Secretary of Education's authority to use wage garnishment for defaulted student loans. The proposed legislation represents a comprehensive reform package that would prohibit garnishment on loans outstanding for more than 10 years, require the Department of Education to refund improperly garnished wages within one week, and establish quarterly verification processes for employers. The bill also creates significant new protections including a private right of action allowing borrowers to sue employers who improperly garnish wages after an order is suspended, with the Department required to pay double damages for improper seizures.

The legislative push reflects growing concerns about the fairness and accuracy of the current AWG system, which critics argue disproportionately harms workers already facing financial challenges. For employers nationwide, the return of garnishment orders means increased administrative burdens and compliance risks, as they must navigate complex rules governing wage withholding. The Center for Fiscal Responsibility has emphasized that while debts must be repaid, collection tools must be fair and transparent with clear appeal processes. For those needing to stop a wage garnishment in MD, resources are available to help navigate these challenging circumstances as stakeholders across the political spectrum monitor the bill's progress through congressional committees.