Can my wages be garnished in Texas to collect a defaulted student loan?

Plain-English summary

The Texas Constitution generally bars garnishing a person's current wages (article XVI, section 28). Two officials asked the Attorney General how that interacts with collecting unpaid student loans. The Commissioner of the Texas Higher Education Coordinating Board asked whether the state comptroller could withhold pay and retirement warrants from state employees who defaulted on Hinson-Hazlewood college loans. The Brazos County Attorney asked whether the Texas Guaranteed Student Loan Corporation could garnish a county employee's wages under a federal statute, despite the state garnishment ban.

On the comptroller's power, the answer was no. The office acknowledged that under Orange County v. Ware a creditor-employer's offset of wages may not be an unconstitutional "garnishment" at all. But the comptroller still had no statutory authority to withhold the warrants. Before 1991, Government Code section 403.055 would have let the comptroller hold a warrant from someone indebted to the state. In 1991 the Legislature added section 403.055(c), saying the section "does not prohibit the comptroller from issuing a warrant to pay the compensation of a state officer or employee," and added the same language to Education Code section 57.48, which had flatly barred warrants to Guaranteed Student Loan defaulters. Read together, those amendments exempted state employees' compensation from the comptroller's withholding power, so the comptroller must issue the warrants as a ministerial duty. Retirement benefits counted as compensation too, so retirement warrants had to be paid as well.

On the federal garnishment question, the answer was yes. The Texas Guaranteed Student Loan Corporation acts under 20 U.S.C. section 1095a(a), which begins "Notwithstanding any provision of State law" and lets a guaranty agency garnish a defaulter's disposable pay. Because of the Supremacy Clause (U.S. Const. art. VI), that federal statute overrides the Texas Constitution's garnishment prohibition. So the corporation could garnish the current wages of defaulting state and county employees, using the federal procedure, which provides notice and a chance to be heard before the garnishment takes effect. The office noted that the existence of this federal remedy might make it unnecessary for the Legislature to give the comptroller withholding power, and cautioned that any such state legislation would have to satisfy due process.

Currency note

This opinion was issued in 1996. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The state statutes here (Government Code sections 403.055 and following, Education Code section 57.48) reflect the 1991 amendments as they stood in 1996, and the federal garnishment statute (20 U.S.C. section 1095a) and the student-loan rules have been amended over the years. The student-loan programs and the agencies named in this opinion have changed substantially since 1996. Treat the specific section numbers and the named agencies as historical; verify current law and the current loan-servicing structure before relying on anything here.

What the opinion meant at the time

State employees with defaulted Hinson-Hazlewood loans: Under the opinion, the comptroller could not withhold their salary or retirement warrants. The 1991 amendments required the comptroller to pay state employees' compensation, and issuing the warrant was treated as a ministerial duty.

State and county employees with defaulted federally guaranteed loans: The opinion concluded the Texas Guaranteed Student Loan Corporation could garnish their current wages under the federal statute, despite the Texas Constitution's garnishment ban, using the federal procedure's pre-deprivation notice and hearing.

The Legislature: The office observed that if the Legislature wanted to let the comptroller withhold warrants for state-loan defaults, it could, but that any such statute should build in due-process notice and a hearing. It also noted the federal garnishment remedy might make such legislation unnecessary.

Common questions

Could Texas garnish wages to collect a student loan, given the state's ban on garnishment?
Yes, for a federally guaranteed loan. The federal statute (20 U.S.C. section 1095a(a)) preempted the Texas Constitution's garnishment ban, so the Texas Guaranteed Student Loan Corporation could garnish the wages of defaulting state and county employees.

Could the state comptroller just hold back a state employee's paycheck for a defaulted Hinson-Hazlewood loan?
No. The 1991 amendments to Government Code section 403.055 and Education Code section 57.48 required the comptroller to pay state employees' compensation, and the office treated issuing the warrant as a ministerial duty (citing Lightfoot v. Lane, where the comptroller could not refuse to issue a warrant for the attorney general's salary).

Did retirement benefits get the same protection from the comptroller's withholding?
Yes. The office treated retirement benefits as compensation (citing Prewitt v. Smith and Davidson Texas, Inc. v. Garcia), so retirement warrants also had to be paid, even to Hinson-Hazlewood defaulters.

Why could federal garnishment override the Texas Constitution?
Because of the Supremacy Clause (U.S. Const. art. VI). 20 U.S.C. section 1095a(a) says "Notwithstanding any provision of State law" a guaranty agency may garnish disposable pay, so no provision of state law, including the Texas Constitution, could block it.

Background and statutory framework

Article XVI, section 28 of the Texas Constitution prohibits garnishment of current wages, with narrow exceptions. The Hinson-Hazlewood College Student Loan Program was established under article III, section 50b of the Texas Constitution and administered by the Texas Higher Education Coordinating Board under title 19, chapter 21, subchapter C of the Texas Administrative Code.

On the comptroller's authority, the office worked through the 1991 amendments. The Seventy-second Legislature added Government Code section 403.055(c) and parallel language to Education Code section 57.48(e), which together exempted state employees' compensation from the comptroller's power to withhold warrants from debtors and defaulters (Act of May 26, 1991, 72d Leg., R.S., ch. 641). Several statutes confirmed the duty to pay: section 403.056 (deliver the warrant to the person entitled to it), section 403.072 (prepare warrants for payroll claims), and section 404.069(a) (warrants from trust funds issued by the comptroller). The office treated the duty as ministerial, citing Lightfoot v. Lane, and treated retirement benefits as compensation, citing Prewitt v. Smith, 528 S.W.2d 893, and Davidson Texas, Inc. v. Garcia, 664 S.W.2d 791.

On the federal question, the office relied on the Supremacy Clause (U.S. Const. art. VI) and the express preemption language of 20 U.S.C. section 1095a(a). It noted that any future state withholding statute would have to satisfy due process under the Fifth and Fourteenth Amendments, citing Mullane v. Central Hanover Bank & Trust Co. for the notice-and-hearing requirement and Mathews v. Eldridge for the flexible three-factor test, and observing that the Fifth Circuit has sometimes found even informal procedures sufficient (Nimon v. Resolution Trust Corp.). To the extent Hinson-Hazlewood loans were subject to the Federal Family Education Loan Program (19 T.A.C. section 21.54), defaulters were subject to garnishment by the corporation.

Citations

Statutes, constitutional provisions, rules, and session law:

• Gov't Code § 403.055; § 403.055(c) (comptroller may not withhold compensation warrants)
• Gov't Code § 403.056 (deliver warrant to person entitled)
• Gov't Code § 403.072 (prepare warrants for payroll claims)
• Gov't Code § 404.069(a) (trust-fund warrants issued by comptroller)
• Educ. Code § 57.48 (and § 57.48(e), as amended in 1991)
• 20 U.S.C. § 1095a(a) (federal wage-garnishment authority for guaranty agencies)
• U.S. Const. art. VI (Supremacy Clause)
• Tex. Const. art. XVI, § 28 (garnishment of current wages prohibited)
• Tex. Const. art. III, § 50b (Hinson-Hazlewood College Student Loan Program)
• 19 T.A.C. § 21.53; § 21.54
• Act of May 26, 1991, 72d Leg., R.S., ch. 641, 1991 Tex. Gen. Laws 2357

Cases:

• Orange County v. Ware, 819 S.W.2d 472 (Tex. 1991)
• Lightfoot v. Lane, 140 S.W. 89 (Tex. 1911)
• Prewitt v. Smith, 528 S.W.2d 893 (Tex. Civ. App.-Austin 1975, no writ)
• Davidson Texas, Inc. v. Garcia, 664 S.W.2d 791 (Tex. Civ. App.-Austin 1984, no writ)
• Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (1950)
• Mathews v. Eldridge, 424 U.S. 319
• Nimon v. Resolution Trust Corp., 975 F.2d 240 (5th Cir. 1992)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/dan-morales/dm-0419
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1996/dm0419.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

Office of the Attorney General
State of Texas

DAN MORALES
ATTORNEY GENERAL

September 23, 1996

Dr. Kenneth H. Ashworth
Commissioner
Texas Higher Education Coordinating Board
P.O. Box 12788
Austin, Texas 78711

The Honorable James M. Kuboviak
Brazos County Attorney
300 East 26th Street, Suite 325
Bryan, Texas 77803

Opinion No. DM-419

Re: Whether the Texas Guaranteed Student Loan Corporation may garnish the wages of a county employee for the purpose of collecting a federally guaranteed student loan (RQ-803)

Dear Gentlemen:

You have each asked this office questions concerning the garnishment or withholding of wages for unpaid student loans. Mr. Ashworth's question concerns whether, as a matter of state constitutional and statutory law, wages may be withheld from a state employee by the comptroller. Mr. Kuboviak's question concerns whether the Texas Guaranteed Student Loan Corporation, acting pursuant to a federal statute, may garnish the current wages of a Brazos County employee despite the Texas Constitution's prohibition on garnishment. Since our contrasting answers depend on their bases in either state or federal law, we are answering these questions together.

Mr. Ashworth asks whether the decision of the Texas Supreme Court in Orange County v. Ware, 819 S.W.2d 472 (Tex. 1991), would authorize the comptroller to withhold payroll and retirement warrants to state employees who are delinquent in repaying Hinson-Hazlewood loans.[1] Ware held that an offset of wages by a county which was both the employer and the creditor of the debtor, a county commissioner, did not constitute a garnishment which was constitutionally impermissible under article XVI, section 28 of the Texas Constitution. While as a consequence of Ware such withholding by the comptroller may not constitute a constitutionally impermissible garnishment of current wages, the comptroller is nevertheless without statutory authority to take such an action.

Before its amendment in 1991, section 403.055 of the Government Code would have permitted the comptroller to withhold a payroll warrant or other compensation to a state employee. It then read in relevant part, "A warrant may not be issued to a person . . . if the person is indebted . . . to the state, . . . until the debt . . . [is] paid." However, when section 403.055 was amended by the Seventy-second Legislature, among the amendments was the addition of section 403.055(c), which states, "This section does not prohibit the comptroller from issuing a warrant to pay the compensation of a state officer or employee." Act of May 26, 1991, 72d Leg., R.S., ch. 641, § 7, 1991 Tex. Gen. Laws 2357, 2359-60. The plain language of this amendment, as well as its legislative history, makes it clear that the comptroller is authorized to pay the compensation of state officers and employees who owe debts to the state. See House Comm. on State Affairs, Bill Analysis, S.B. 1095, 72d Leg., R.S. (1991). Moreover, precisely the same language was added by the Seventy-second Legislature to subsection (e) of section 57.48 of the Education Code, which had before amendment flatly prohibited the comptroller from issuing warrants to persons who defaulted on Guaranteed Student Loans. Act of May 26, 1991, 72d Leg., R.S., ch. 641, § 1, 1991 Tex. Gen. Laws 2357, 2357-59. These amendments taken together evidence a clear legislative intent to exempt compensation of state officers and employees from the comptroller's power to withhold warrants from debtors and defaulters.

That being the case, the comptroller must issue such warrants as a matter of law. Government Code section 403.056 requires the comptroller, after certain procedures are completed, to "deliver the warrant to the person entitled to receive it." Government Code section 403.072 requires the comptroller to accept payroll claims from state agencies and prepare warrants to pay for such claims. Government Code section 404.069(a) provides that warrants to withdraw money from trust funds held by the treasurer "shall be issued by the comptroller." The issuing of such warrants is not discretionary; it is a ministerial duty. See Lightfoot v. Lane, 140 S.W. 89 (Tex. 1911) (holding that comptroller could not refuse to issue warrant for attorney general's salary).

Retirement benefits, like wages and salaries, constitute compensation. See, e.g., Prewitt v. Smith, 528 S.W.2d 893, 896 (Tex. Civ. App.-Austin 1975, no writ); Davidson Texas, Inc. v. Garcia, 664 S.W.2d 791, 793 (Tex. Civ. App.-Austin 1984, no writ). Accordingly, like salary warrants, such benefits must be paid to those entitled to them even if such persons have defaulted on Hinson-Hazlewood loans, pursuant to section 403.055(c) of the Government Code.

Should the legislature find this result unfortunate and desire to remedy it, it may of course do so. We caution, however, that any such legislation must consider the question of due process. A salary or retirement warrant is valuable property, and the Fifth and Fourteenth Amendments to the United States Constitution require that such property not be taken without due process of law. The requirement of due process is that a deprivation of this nature must "be preceded by notice and opportunity for hearing appropriate to the nature of the case." Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 313 (1950). What process may be due in a particular case was generally adumbrated by the Supreme Court in Mathews v. Eldridge, 424 U.S. 319, 334-35:

      [I]dentification of the specific dictates of due process generally requires consideration of three distinct factors: First, the private interest that will be affected by the official action; second, the risk of an adverse deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government's interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail.

The Mathews yardstick is a flexible one. The United States Court of Appeals for the Fifth Circuit has on occasion found even informal procedures sufficient to meet due process requirements. See Nimon v. Resolution Trust Corp., 975 F.2d 240, 247 (5th Cir. 1992). However, we believe it would be most prudent for the legislature, should it decide to address this matter by statute, to include notice and hearing requirements in the statute as well.

In the light of our answer to Mr. Kuboviak's question, however, it may not be necessary for the legislature to address the matter, as we will presently explain. Mr. Kuboviak asks whether the Texas Guaranteed Student Loan Corporation ("TGSLC") may garnish the current wages of an employee of Brazos County despite the provision of article XVI, section 28 of the Texas Constitution, the same provision which was at issue in Ware. Because the statutory basis on which the TGSLC is acting is 20 U.S.C. § 1095a(a), a federal statute which explicitly preempts state law, the Texas Constitution's prohibition of such garnishment is ineffective in this case.

Article VI of the Constitution of the United States provides, in relevant part, "This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all treaties made, or which shall be made, under the authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding." U.S. Const. art. VI (emphasis added).

In this instance, the language of 20 U.S.C. § 1095a(a) expressly pre-empts any contrary state law. It reads, "Notwithstanding any provision of State law, a guaranty agency . . . may garnish the disposable pay of an individual to collect the amount owed by the individual . . . ." This language makes it clear that the Texas Constitution and statutes may not be interposed to prevent TGSLC as a guaranty agency from proceeding to garnish the wages of an employee of Brazos County.

That being the case, TGSLC has among the tools at hand for its collection of the federally guaranteed loans which it administers, the ability to garnish current wages of defaulting state employees, pursuant to 20 U.S.C. § 1095a(a). The procedure by which it can effect such garnishment is defined by the statute, which provides for pre-deprivation notice and opportunity to be heard. To the extent that Hinson-Hazlewood loans are subject to the Federal Family Education Loan Program, see 19 T.A.C. § 21.54, defaulters are subject to garnishment by TGSLC. It may well be therefore that the availability of this remedy would obviate the necessity for any amendment of section 403.055 of the Government Code or section 57.48 of the Education Code. Such a decision, of course, is within the province of the legislature rather than this office.

                              SUMMARY

      Section 403.055 of the Government Code and section 57.48 of the Education Code prohibit the comptroller from withholding salary or retirement warrants from persons who are delinquent in repaying Hinson-Hazlewood college student loans. However, the Texas Guaranteed Student Loan Corporation, pursuant to 20 U.S.C. § 1095a(a) has the authority to garnish the wages of persons who default on Federal Family Education Loan Program loans, including state and county employees, despite the stricture of article XVI, section 28 of the Texas Constitution.

                                                  Very truly yours,

                                                  DAN MORALES
                                                  Attorney General of Texas

JORGE VEGA
First Assistant Attorney General

SARAH J. SHIRLEY
Chair, Opinion Committee

Prepared by James E. Tourtelott
Assistant Attorney General

Footnote (best-effort transcription; the linked PDF is authoritative):

[1] The Hinson-Hazlewood College Student Loan Program, established pursuant to article III, section 50b of the Texas Constitution, see 19 T.A.C. § 21.53, is administered by the Texas Higher Education Coordinating Board pursuant to the rules set forth in title 19, chapter 21, subchapter C of the Texas Administrative Code.