FAQ: Understanding the 2025 Wage Garnishment Crisis and Its Impact

What is wage garnishment and why is it becoming more common in 2025?

Wage garnishment is the legal process where creditors or the government seize a portion of a person’s paycheck to cover unpaid debts, and it’s becoming more widespread due to the resumed collection of defaulted federal student loans following pandemic-era suspensions.

How many Americans are affected by wage garnishment in 2025?

According to TransUnion data, nearly two million Americans had their wages garnished by mid-2025, with another two million projected to follow by year’s end.

What percentage of income can be taken through wage garnishment?

The U.S. Department of Education can automatically withhold up to 15% of a borrower’s paycheck without a court order, and in many states, up to 25% of a worker’s disposable earnings can be legally taken each pay period.

What types of debts lead to wage garnishment?

Federal student loans, private debts, child support, unpaid taxes, and medical bills collectively account for wage garnishment orders.

How does wage garnishment impact workers and their families?

Workers lose about 11% of their gross earnings during the typical five-month collection period, which often pushes families into crisis budgets, late rent payments, or food insecurity, and leads to increased job turnover and financial strain.

Which age group is most affected by wage garnishment?

ADP’s research shows garnishment rates are highest among workers aged 35 to 44—the prime years of child-rearing and mortgage payments.

What are the broader economic effects of wage garnishment?

Employers report higher absenteeism, lower productivity, and burnout among affected employees, while communities of color are disproportionately affected, widening existing racial and economic disparities.

What policy changes are being proposed to address wage garnishment?

Legislation introduced in spring 2025 by Senators Ayanna Pressley, Cory Booker, and Elizabeth Warren seeks to suspend wage garnishments on student loan borrowers, and advocates are urging modernization of the Consumer Credit Protection Act.

How do families typically cope with wage garnishment?

Families often adjust by cutting back on essentials, postponing medical care, or taking on additional debt, with single-parent households and those led by women experiencing compounded impacts.

Where can I find more information about stopping wage garnishment?

For more information on how to stop wage garnishment in Maryland, visit the provided resource.