Student loan collections have resumed, and administrative wage garnishment (AWG) orders are again reaching employers. HR teams must coordinate intake, employee communication, priority rules, and documentation—while payroll applies the 15% of disposable earnings cap and remits on time. This playbook centers HR first: build humane, consistent processes that protect your people and your organization—then support those processes with reliable payroll automation.
People matter. Behind every deduction is a real person. Lead with clarity and empathy; pair that with accurate calculations and clean audit trails.
Why this matters now
- More AWG notices are landing with employers for defaulted federal student loans.
- Mistakes are costly: penalties, re-processing, employee distrust, and audit risk.
- HR is the front line for intake, communication, and policy—payroll executes the math.
One-question test for urgency
If you’re looking at an AWG order today, could waiting make things worse?
Yes. Missed deadlines and incorrect calculations can escalate. See the Urgent module below.
What is administrative wage garnishment (AWG)?
AWG is when a federal agency instructs an employer to withhold part of an employee’s disposable pay to repay defaulted federal student loans. Employers must 1) review and honor the order, 2) calculate properly, 3) remit on time, and 4) document thoroughly.
Common parameters
- Maximum withholding: generally up to 15% of disposable pay.
- Priority: student loan AWGs are typically lower priority than child support or federal tax levies; confirm the stack in every case.
- Protected earnings: ensure the employee retains required minimum take-home pay per federal/jurisdictional rules.
HR tip: Maintain a repeatable garnishment SOP in your HR policies. Payroll then mirrors that SOP in system settings so each order runs the same way, every time.
The 2026 landscape in plain English
- Collections are active. Expect Treasury offsets and AWG activity to continue.
- Borrower changes are common. Employees may pursue rehabilitation, consolidation, or new repayment plans—HR should be ready for questions.
- Employer takeaway: Prepare for more notices, tighter audit expectations, and the need for empathetic employee communication.
The employer playbook (HR-first, step-by-step)
Step 1: Intake & verification (HR owner)
- Centralize garnishment mail/email to a single monitored inbox.
- Verify employee identity, order details, effective date, and remit-to information.
- Acknowledge receipt to the employee; explain next steps and timelines.
- Store the order in your HRIS document center and log a case/ticket for tracking.
Urgent module (route to HR Advisory)
If you have an AWG order in hand, act now. Missing deadlines can escalate.
Primary button: Talk to an HR Advisor → https://hr.peopleworx.io
Secondary link: Explore Payroll & HRIS → /payroll
Step 2: Communicate with empathy (HR owner)
- Share a plain-language explainer: what the order is, how the math works, when it starts, how long it might last, and who to contact.
- Provide resources on default exit options (rehabilitation, consolidation) and repayment plan guidance from official federal sites.
- Update your employee handbook with how garnishments are handled and how privacy is protected.
Step 3: Apply priority rules (HR + Payroll)
- If multiple orders exist (e.g., child support, tax levy), confirm priority before calculating the student loan amount.
- Document the decision trail (which order, why, and effective dates).
Step 4: Calculate correctly—every time (Payroll owner)
- Apply the 15% of disposable earnings cap.
- Respect protected earnings thresholds.
- Configure effective dates, order caps, and auto-stop when paid in full or rescinded.
- Test once on a sample check and retain the test math in your case file.
Step 5: Remit & reconcile (Payroll owner)
- Remit per order frequency; avoid batching delays.
- Reconcile payments to payroll registers and keep audit-ready logs (who, when, amount, method, confirmation).
- Set reminders for review dates or expected balance changes.
Step 6: Tighten controls & reporting (HR + Payroll)
- Maintain a garnishment dashboard of status, next remittance date, and exceptions.
- Perform quarterly quality checks—re-calculate a small sample to confirm accuracy.
- Retain artifacts (orders, communications, remittance proof) in a secure HRIS folder with role-based access.
Where payroll & HR tech fits (enable the HR process)
- Policy to practice: Your HR SOP drives the setup; payroll applies the math.
- Consistency at scale: Priority logic, caps, protected earnings, and due-date reminders reduce error risk.
- Employee experience: Transparent pay-stub notes and ready-to-share explainers reduce confusion and churn.
- Audit confidence: Clean remittance logs and exportable reports shorten audit cycles.
Explore Payroll & HRIS with PeopleWorX
Frequently Asked Questions
If you need help with workforce management, please contact PeopleWorX at 240-699-0060 | 1-888-929-2729 or email us at HR@peopleworx.io
What is administrative wage garnishment (AWG) for student loans?
AWG is when the federal government directs an employer to withhold a portion of an employee’s disposable pay for defaulted federal student loans. Employers must comply, calculate correctly, and remit on time. The cap is generally up to 15% of disposable earnings.
Which orders take priority over student loan garnishments?
Child support and federal tax levies typically take priority. Always confirm priority rules when multiple orders exist.
How do I calculate the withholding amount correctly?
Apply the order’s instructions, cap the deduction at 15% of disposable pay, and ensure protected minimum earnings. Automate the math in payroll and document your steps.
What should HR/payroll do first when an AWG arrives?
Verify the order, log it in HRIS (Student Loan AWG type), confirm effective dates, apply priority rules, calculate the amount, set up remittance, and store documents for audit.
Can an employee stop a student loan garnishment?
Employers cannot stop a valid AWG. Employees may explore consolidation or rehabilitation to exit default and should consult official federal resources or their servicer.
What happens if we calculate or prioritize incorrectly?
You may face penalties or re-processing. Use automation plus a review checklist. Maintain clear logs of calculations and remittances.
When should I route to HR Advisory instead of Payroll?
If the situation is urgent or high-risk (e.g., an active dispute, termination, or complex complaint alongside the garnishment), route to HR Advisory first. For standard AWG setup and processing, start with Payroll/HRIS.
Understanding Taxes is Critical but do You Know Where Your Overall HR Risk Exists?
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