After years on pause, student loan wage garnishment has officially returned. The Department of Education confirmed that garnishment notices went out the week of Jan. 7, 2026, and HR and payroll teams are now facing a new set of challenges as they work to support affected employees.
A recent Employee Benefit News article by Laurel Taylor, founder and CEO of student debt and savings optimization platform Candidly, examined what’s driving this shift and outlined practical steps employers can take. Under federal rules, administrative wage garnishment can require employers to withhold up to 15% of after-tax pay for employees who have defaulted on federal student loans. For workers already stretched thin, that kind of hit to their paycheck can be devastating.
The timing couldn’t be worse. Many borrowers made financial decisions based on what they believed their payments would be under the SAVE plan, only to face plan changes and transitions that have created further confusion—and for some, higher payments. A national survey commissioned by Candidly and conducted by Morning Consult found that only 41% of HR and payroll leaders were even familiar with the prospect of wage garnishment due to student loan default. Among borrowers, once informed about garnishment, roughly 73% said they were worried because they weren’t confident in their repayment plan, according to the survey data cited by Ms. Taylor in Employee Benefit News.
At this point, time is the only asset that can still prevent avoidable harm. Employees need time to confirm their status, understand their options, and take corrective steps before withholding begins. Employers need time to prepare operations and support employees in ways that reduce stigma.
Plan sponsors should start with proactive communication. A short message explaining what wage garnishment is, who it applies to (defaulted federal borrowers), and where employees can check their status can go a long way. The goal isn’t to alarm anyone—it’s to make information easy to find before time runs out.
Creating a confidential path for employees to seek help is equally important. Workers should be able to get guidance without going to a manager or disclosing sensitive details in public channels. Resources should be centralized in a benefits portal or HR hub, with clear next steps for anyone who receives a garnishment notice.
Offering real guidance matters more than providing a list of links. The federal repayment landscape is complex, and many employees won’t know which programs apply to them. Financial coaching or specialized support can help employees understand their options and reduce the risk of loan default. AI-driven guidance can translate complexity into plain language and route higher-stakes cases to trained professionals.
Finally, payroll operations need to be ready before the first notices arrive. Training the team on intake, timelines, employee FAQs, and escalation points now will prevent scrambling later. Deciding who answers which questions—payroll, HR, legal, or external partners—and documenting the process reduces errors and protects teams from becoming bottlenecks.
Employers can’t control the broader system, but they can control what employees experience at work and help reduce their financial stress, at least when it comes to student loan repayments. Organizations that communicate early and help impacted employees avoid poor outcomes will strengthen trust and loyalty and protect their brand. Those that don’t risk absorbing the blowback—fairly or not—when paychecks suddenly change.
