Q: How do I qualify for the student loan tax offset hardship refund?

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Stanley tate

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You can get your tax refund back after an offset for student loans, but it is extremely hard to do. To get your refund back you have to:

  • Identify who took your tax refund
  • Contact the company to find what information you need to submit (hardship packet)
  • Submit the necessary information to the company
  • Follow-up to confirm they received the necessary information
  • Wait to see if your hardship request was approved

Filing bankruptcy when you get the notice of offset but before the refund is scheduled to be deposited may also help you keep your refund. While the the bankruptcy won't get rid of your student loan debt, I've used it to protect refunds from offset. Talk to a student loan bankruptcy attorney near you to see if this is an option.

Why Your Refund was offset for student loans

You're in default on a FEDERAL student loan. That is the only reason why your income tax refund was offset for student loans. Private student loans cannot offset your tax refund.

Once you defaulted (missed 270 days of payments exclusive of deferment or forbearance) your loan servicer sent your defaulted loans to either:

  • the Department of Education's Debt Management and Collections System or
  • the loan guaranty agency holding your loans (MOHELA, TRELLIS, NYSHE, etc.)

From there, the loan holder that has your defaulted student loan contacts the Department of Treasury telling them to certify your tax refund for offset for student loans.

Do not file for your tax refund until you're completely out of default.

And then they send you an offset notice to the last known address they have on file for you.

The offset notice only has to be sent one time. So if they sent it to you last year, they don't have to send notice this year.

How to Check Federal Tax Offset Status for Student Loans

There are two ways to check your offset status for defaulted federal loans:

  1. Check the studentaid.gov and
  2. Call the Treasury Offset Program hotline

#1 The studentaid.gov website

The studentaid.gov website will let you see if any of your federal student loans are in default.

Do not file your tax refund until you're completely out of default.

I don't care if you're in a rehabilitation agreement and are making your payments to one of the Department of Education's collection agencies.

Until you're completely out of default and you've been decertified for offset, your tax refund can be taken.

So wait to file your tax return until you're completely out of default.

#2 The Treasury Offset Program

You can easily check your offset status by contacting the Treasury Offset Program at 1-800-304-3107.

The problem with this method is that it only tells you your status at the time you call.

So if your loans are in default today but you have not been certified for tax offset, the Treasury Department will tell you you're not scheduled to have your tax refund taken. Thinking your safe, you'll file your tax refund only to find out you've been certified for offset.

But if your student loans are in default, your offset status can change after you file your tax return.

Eligibility for Financial Hardship Reversal

Let me start with this:

Once your tax refund has been taken, it's near impossible to get it back.

In my experience, there are no set eligibility requirements to get your tax refund back as a hardship.

I've seen student loan borrowers' financial hardship requests denied even though they were single mothers of 3, homeless, or faced severe medical issues.

I've also seen people get their tax refund offset even though they were in a repayment plan or entered into a repayment agreement.

That said, every year, a small number of borrowers are successful in getting their refund back as a financial hardship.

Here's what they have in common:

  • their defaulted loans are Federal Family Education Loans
  • their defaulted loans are with a company like ECMC or Trellis rather than the Department of Education
  • their hardship is for homelessness, eviction, foreclosure, utilities being shut off, or severe medical issues.

Which Hardship Form to complete

To find out which form you need to use, you first have to know who took your tax refund.

Was it the Department of Education? Was it ECMC? Or was it some other company.

You can find out who took your tax refund by calling the Treasury Offset Program at 1-800-304-3107. (Don't call the IRS; they'll tell you to call the TOP.)

Once you know who took your tax refund, you'll know who to contact to find out the form they want you to use to get back your refund.

That said, the Department of Education and ECMC are the two most common agencies that offset tax refunds.

ECMC Hardship Form

Before using this form, contact ECMC to make sure:

  • they offset your tax refund and
  • this is the form they want you to use
Layout of ECMC tax refund offset student loan hardship request
ECMC tax refund offset hardship reversal form.

Department of Education Hardship Form

Before using this form, contact the Department of Education's Default Resolution Group (800-621-3115) to make sure:

  • they offset your tax refund and
  • this is the form they want you to use
Tax refund offset hardship request form Department of Education
U.S. Department of Education tax refund offset hardship reversal form.

Where to Submit Hardship Forms

Follow the instructions exactly when submitting your hardship request form.

Submit it to the address or fax number that's on the form.

Afterward, call and confirm your paperwork was received and that they have all the necessary documents to process your request.

Oftentimes, I find that faxes are mysteriously cut-off, or paperwork that was included in the file we mailed supposedly wasn't received.

So you want to follow-up and get confirmation that everything was received.

After that, you're waiting.

I've heard people say they waited 6-8 weeks to get a decision.

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I'm a student loan lawyer that helps people like you with their federal and private student loans wherever they live.

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