Will Student Loans Take My Taxes in 2025?

• Your tax refund can be garnished in 2025 if your student loans are in default, meaning you’ve missed at least nine months of payments.

• The IRS won’t offset your tax return just because you owe student loans, as long as you’re current or not yet in default, your refund won’t be withheld.

• If your student loans are in deferment or forbearance, your tax refund is protected. The government only seizes refunds when loans are delinquent or in default

Student loan offset was suspended for the early part of 2025, extending the pandemic-era pause. But starting May 5, federal student loans will once again put your tax refund at risk, according to the Education Department.

The threat of losing your income tax refund, especially as tariffs threaten to push prices even higher, can be scary.

But here’s the good news: the IRS isn’t garnishing the refunds of all federal student loan borrowers.

Instead, only those borrowers whose loans are in default and already in debt collection are at risk of having their tax returns withheld through the Treasury Offset Program (TOP).

Ahead, we’ll explain three things:

1. How to confirm if your refund is at risk of offset

2. How the Treasury Offset Program works

3. How to protect your refund from being taken

We’ll also answer the common questions borrowers have asked us over the years about how to stop the federal government from garnishing their refunds for defaulted student loans.

Yes, student loans can cause your tax refund to be garnished in 2025, but only if you’re officially in default. Default typically means you’ve missed at least nine consecutive monthly payments (270 days) on Direct Loans and FFEL Program loans or missed payment deadlines on Perkins Loans.

However, the IRS won’t offset (the official term for taking your refund) your taxes if your loans are in forbearance, deferment, enrolled in a repayment plan, or just delinquent by a few months.

Note: Some state income tax refunds can also be withheld if your federal student loans are in default, provided your state participates in the Treasury Offset Program (TOP) or has its own offset procedures. Stay informed by checking with your state’s revenue department or loan servicer to understand how to exit default.

You received your tax refund this year because federal student loan collections, including tax refund offsets, were on hold during the payment pause introduced in the pandemic, and were still paused when refunds were issued. But with collections resuming in May, your refund will be at risk this year and next if your loans remain delinquent or in default.

Related: How to Get Student Loans Out of Default

The fastest way to check if your income tax refund is at risk from defaulted student loans is to call the Default Resolution Group (DRG) at 1-800-621-3115.

DRG is part of the student loan debt collectors’ network working for the U.S. Department of Education. When you call, ask the representative to check the National Student Loan Data System (NSLDS) to identify all your federal student loans, especially older or overlooked FFEL and Perkins loans that might be in default.

You can also verify your loan status online by logging into your accounts at StudentAid.gov or MyEdDebt.ed.gov.

Note: Federal law requires government agencies to notify you before your tax refund is offset for delinquent debts, including defaulted loans. But notification is typically mailed to the last address your loan holder has on file. There’s no requirement that you actually receive or read the notice, just that it was sent. To protect your refund and avoid other consequences, make sure your current address is always updated with your loan servicer or debt collector.

After you miss your ninth monthly payment (270 days) on your federal student loans, your loan servicer transfers your debt to collections. Your account is then flagged in the Treasury Department’s system, making your federal tax refund eligible to be intercepted through the Treasury Offset Program.

While borrowers often use terms like “garnishment” or “seizure,” those describe different collection methods. Treasury Offset specifically refers to withholding federal payments—like your tax refund—to repay defaulted federal debts, including student loans.

Here’s how it works:

1. Your federal loans go into default. Typically, this happens when you haven’t made payments for 270 days or more (for Direct Loans or FFEL loans).

2. Your loan holder sends the debt to the Treasury Department. The Department of Education (or a loan guaranty agency) refers your debt to the Treasury Offset Program for collection.

3. TOP sends you a 60-day notice. This notice, the Notice of Intent to Offset, gets mailed to the last address your loan holder has on file. It outlines your debt amount, the creditor, and your rights to dispute or resolve the debt.

4. You file your federal taxes. After you submit your tax return, the IRS calculates your refund.

5. IRS checks the TOP database before issuing refunds. If they find your defaulted student loan listed, the IRS sends your refund (or part of it) directly to TOP, rather than to you.

6. TOP applies your refund to your debt. The money intercepted from your refund is used to pay down your student loan balance.

7. TOP notifies you. After the offset, you’ll receive a notice detailing how much of your refund was taken and applied to your debt.

TOP can take your entire refund if your debt equals or exceeds your refund amount. If your refund is bigger than your debt, you’ll get back what’s left over. If your refund is smaller, you’ll lose the whole thing, and you’ll still owe the remaining debt.

Note: The offset process repeats each year you remain in default and qualify for a federal tax refund.

Ultimately, the best way to protect your tax refund from being seized is to get your student loans out of default and back into good standing. But getting out of default can take time—and in the meantime, your refund may still be at risk.

Here are the options you have to protect your tax refund right away:

1. Pay the balance in full or negotiate a settlement.

Paying the entire balance immediately clears the default, but settlements on federal student loans typically aren’t discounted significantly. As a result, most borrowers can’t realistically afford this option.

2. Enroll in loan rehabilitation but start payments early.

Rehabilitation requires making nine payments over ten months. Simply enrolling won’t protect your tax refund right away. Typically, you must make about five monthly payments before your name is removed from the Treasury’s offset list. Until then, your refund remains at risk.

3. Consolidate your loans but plan your timing carefully.

The Direct Consolidation Loan process takes about two months to complete. If your consolidation finishes before you file your tax return, your refund is safe. But if you’ve already filed your taxes before consolidation completes, your refund could still be intercepted this year.

If your tax refund has already been intercepted, you still have three main options to try to get your money back:

1. Request a Hardship Exception

If the offset of your refund causes (or will cause) severe financial hardship, you can ask the Department of Education for a hardship exception—either before the offset happens (hardship hearing) or after it occurs (hardship refund).

Both require detailed documentation showing your financial difficulties, such as proof of income, expenses, and dependents. Approval is difficult and granted on a case-by-case basis. To strengthen your case, it may help to understand what qualifies as undue hardship for student loans.

2. File an Injured Spouse Allocation

If you filed a joint tax return with a spouse who owes defaulted federal student loans, you can recover the innocent spouse’s share of the refund by filing IRS Form 8379 (“Injured Spouse Allocation Form”). You can file this form either with your tax return or separately afterward. If you’re unsure how spousal debt affects you, learn how your spouse’s student loan can lead to wage or tax refund garnishment.

3. File Bankruptcy to Protect or Recover Your Refund

Bankruptcy typically won’t eliminate federal student loan debt, but filing triggers an “automatic stay,” temporarily halting collection actions—including tax offsets.

This option might help you protect or even recover your refund if your offset occurred unexpectedly or you received late notice of an impending offset. But filing for student loan bankruptcy introduces complexities, so professional legal guidance is highly recommended.

If your student loans are in default, your first step is to confirm exactly how much you owe and who holds your loans now. Federal student loan balances (including defaults) appear on StudentAid.gov, while private loan defaults show up on your credit reports.

With federal collections and tax refund offsets fully resumed, ignoring default will only make things worse.

Not sure where to start?

Book a call with our student loan expert.

We’ll help you verify your default status, identify exactly how much you owe, and clearly explain your options, whether that’s loan consolidation, rehabilitation, or negotiating with a private lender.

Related Readings:

• What to do After Receiving a Letter from the Default Resolution Group

• Why Aren’t My Student Loans on My Credit Report

• How to Access and Resolve Defaulted Student Loans