Student Loan Wage Garnishment
What happens if you are the employee and you receive a Student Loan Wage Garnishment?
What does a Student Loan Wage Garnishment mean, and how are you supposed to respond to the garnishment?
As the employer, you are receiving the wage garnishment because your employee did not pay their student loans. As the employer, once you receive the student loan wage garnishment, you are required to withhold money from their paycheck to pay on the student loans.
Wage garnishment for a student loan is only possible when the student loan in question is federally backed. This allows the government to do an employee wage garnishment to repay student loans.
A student loan wage garnishment is different from a regular wage garnishment because you do not need a court order issuing the garnishment. This is possible because the garnishment order is from the government.
If your employee has defaulted on the loan and they have been notified, you may receive a packet of information that requires you to withhold earnings from your employee.
The packet of information will ask you questions such as how much your employee makes and what they get paid. It will include general questions that will help the lender discern how much of their wage can be garnished.
It is important that you fill out the packet within the time period that is allowed. It is your responsibility to respond to the wage garnishment before the time period expires.
It is also important that you start withholding money immediately. You may not have the dollar amount that you are supposed to withhold, but you need to start setting some back for when the fees become due.
As an employer, you need to give your employee information explaining that their wages are going to be garnished. It is important that they are informed of this garnishment because they have rights under the law to object to the garnishment.
Sometimes the employee does not receive a letter or notice of the garnishment via mail. If that is the case, they must contact the loan company immediately to take action and make a payment schedule.
It is important to note that if the employee with the wage garnishment leaves your business, you have the responsibility to tell the loan company that they have left your business to protect yourself from future garnishments for that specific employee. Without proper communication and documentation, you could be held liable as an employer.
We want to help walk you through this to explain your rights and responsibility as the employer. If you have received a garnishment for student loans for an employee, give us a call. We will help you through the process.