Q: How do I know if student loans will take my tax return?

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The Department of Education can take your tax refund if you're in default on federal student loan debt. They can take your tax refund even if you're in a repayment agreement. They can take it even if you're in the loan rehabilitation program. They could take it even if you applied for loan consolidation.

The only way to stop the Department of Education from taking your tax refund is to get your defaulted student loans completely out of default. So if you want to get your refund back, do not file your income tax return with the IRS until you're completely out of default and you're removed from the Treasury Offset Program.

Here's how to find out if your student loans will take your tax refund:

  1. Create a Federal Student Aid ID
  2. Log in to studentaid.gov
  3. Check to see if any of your federal student loans are in default

If any of your loans are in default, wait until after you're out of default before filing your federal income tax return.

(You can also call the Default Resolution Group and ask an operator if any of your federal loans are in default.)

Even if you call the Treasury Offset Program hotline and you're not in the database, your income tax refund can still be taken.

Contact information to check IRS for tax refund offset: 800-304-3107. You'll need your social security number to check the automated system.

Click here to learn What Happens if You Don't Pay Your Student Loans

If I owe student loans, will I get a tax refund during COVID-19?

You're eligible to get a tax refund during COVID-19 if you owe federal student loans and are not in default.

If you're in default on federal student loans, you will get your tax refund only if the Department of Education owns your loans.

If your defaulted loans are federal student loans but are owned by a guaranty agency (Federal Family Education Loans) or your school (Perkins Loans), then your refund may still be offset.

The coronavirus pandemic relief effort passed by the federal government only applies to tax offsets made by the Department of Education.

The suspension of collection efforts for student loans is scheduled to last until December 31, 2020.

Can student loans take your tax refund without notice?

Your tax refund can be offset without notice if two things are true:

  1. you're in default on federal student loans and
  2. you received notice in the past that your loans were in default.

For federal loans, student loan default happens when you miss 9 monthly payments (270 days), and you're not in a deferment or forbearance. Until day 270, your simply past due on your student loan payments. Your income tax refund can't be offset if you're simply past due under your repayment plan but not in default.

Tax refund offset letter for student loans
Letter notifying borrower their income tax refund was offset for student loans.

Under the rules, the Department of Education has to send borrowers notice that they're eligible for tax offset, Social Security offset, misc. federal payments, and wage garnishment the first year that their loans are in default.

After that, they're not required to send borrowers' offset notice again.

Also, they're not required to send notice to the borrower's current address. Instead, they're required to send notice to the last address they have on file.

Stated differently, it is your responsibility to update your address with your student loan servicer when you move.

Click here to learn How to Qualify for Student Loan Tax Offset Hardship Refund for Financial Hardship

Will I get my 2020 tax refund if I owe student loans?

You're eligible to get your tax refund if you owe federal student loan debt but are not in default.

The U.S. Department of the Treasury can offset your refund for student loans only if you're in default on federal student loans.

They cannot offset if you're past due.

They cannot do a tax refund offset it if you're in default on a private loan.

Only defaulted federal student loans can offset your refund.

Private lenders and private loan holders can never offset your tax refund. They also cannot garnish your wages or your bank account until they sue you and get a judgment against you. Until that happens, all they can do is try and lower your credit score by posting negative payment information on your credit report.

How do I stop student loans from taking my taxes?

The only way to stop student loans from taking your taxes is to get your federal student loans completely out of default.

You typically have three options to get your federal loans out of default:

  1. Negotiating a federal student loan settlement (student loan offer in compromise)
  2. Consolidating the defaulted loans into a Direct Consolidation Loan and
  3. Completing the Loan Rehabilitation Program.

(FYI: You'll typically save more money with a private student loan settlement than you would with a federal student loan settlement.)

It is not sufficient to be in a payment arrangement but still in default.

You have to be completely out of default to 100% stop student loans from taking your taxes.

Click here to learn more about How Can I Stop Student Loans From Taking My Taxes?

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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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