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Stopping Tax Offsets Due To Student Loan Debt

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Stop Tax Offsets

For anyone getting a refund, tax season is the best time of year. But for those who have defaulted on their federal student loans, their potential joy can be seized by the IRS to pay down the federal debt.

It may not currently be tax season, but it’s never too early to start preparing to secure that refund. Specifically, if you have federal student loans that you’re behind on, it’s in your best interest to get in good standing before the Department of Education decides to collect your tax refund.

If you’re worried about the IRS taking your tax refund, you’re in the right place.

Note: Stopping tax offsets takes 6-9 months for most people. If you're looking at this article right before filing your tax return, you might want to wait and get this process completed first.

If you're not quite sure where to start or what to do, consider hiring a CFA to help you with your student loans. We recommend The Student Loan Planner to help you put together a solid financial plan for your student loan debt. Check out The Student Loan Planner here.

Quick Navigation
The Basics of Tax Offsets
Request a Review to Challenge the Offset
Agree to Pay the Debt
Do Nothing
Private Loan Tax Offset
How to Prevent Tax Offsets

The Basics of Tax Offsets

First, tax offsets are legal. The Treasury Offset Program, created in 1986 and overseen by the Bureau of Fiscal Service, allows departments of the federal government to request that the IRS seize tax refunds to pay down debt owed to the federal or state governments.

Unlike for private loans, the federal government doesn’t need permission from anyone to garnish your earnings, including your tax refund, if you have defaulted on your federal student loans.

In the case of federal student loans, the Department of Education may send the Treasury a request to seize your tax refund to put toward defaulted loans. If they do this, they can take your entire tax refund. If the debt is paid off and any amount of your refund remains, it will be returned to you.

If you have a spouse with whom you file your taxes jointly, the IRS can seize the entire joint tax return, even if your spouse is not connected to your federal student loan. However, it is possible to get your spouse’s portion of the refund returned to him or her.

It’s important to note that, because there is no statute of limitations for federal loans, the IRS can offset your taxes for every year your federal student loans are in default.

Fortunately, the IRS is legally required to notify you by mail of their proposal to offset your taxes and allow you some time to respond.

If you have federal student loans that are in default, you may receive a letter in the fall notifying you that the IRS plans to take your potential tax refund and apply it to your education debt. The letter will include information about your loans and instructions on how to proceed.

Once you get the letter, you can do one of three things:

1. Request a review to challenge the offset. 

2. Agree to pay the debt. 

3. Do nothing. 

Request a Review to Challenge the Offset

First, check all the information in the letter against your records and your loan accounts. You can even request an official copy of your loan information from the Department of Education. If anything looks incorrect, you have the right to request a review hearing, where you’ll have the opportunity to prove that your taxes should not be offset.

Here are some common reasons you might request a review hearing:

  • check
    The loan balances are incorrect
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    The debt is unenforceable
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    The loans are not in default
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    You do not owe the debt
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    You are currently in a default rehabilitation program
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    You are in bankruptcy
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    The debt was discharged
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    You are eligible for total and permanent disability discharge

Challenging the offset can be difficult, so you need very compelling proof. If you’re set on this course of action, consider hiring a lawyer and the costs of doing so.

Agree to Pay the Debt

If you've agreed that you owe the debt, that doesn't mean that you are expected to pay all of it all at once. You certainly pay if all if you are able, but we're guessing that if you're here, you're not able to do that.

Instead, you can enter into a written agreement with the Department of Education to pay the debt. How will you pay the debt? First, you'll need to take steps to remove your loans from default. That could include default rehabilitation or consolidation.

After that, we suggest looking into federal repayment plan options so you avoid defaulting again in the future.

Of the various repayment plans offered by the Department of Education, borrowers who default would likely benefit most from income-driven repayment plans. In those plans, your payment amount is calculated each year based on your income and family size and can be as low as zero. Plus, after 20 to 25 years, any remaining balance is forgiven.

Of course, do thorough research before enrolling in any repayment plan. None of them are one-size-fits-all so make sure the one you choose works for your situation.

Do Nothing

If you choose not to take action, miss the deadlines to take action, or never received a letter warning you of the proposed tax offset, the IRS will take your tax refund. Thankfully, you’re not completely out of luck at this point.

If you believe your refund was taken in error, you can reach out to the Department of Education (not the IRS) to contest the offset. See the list above of common reasons to request a review hearing for the types of errors that would get your refund returned to you.

If your refund was not taken in error but you can prove financial hardship, you may be able to get at least a portion of the refund returned to you. This method is very difficult and is not guaranteed to be successful.

If you filed your taxes jointly with your spouse, he or she can file an “injured spouse” claim to get his or her portion of the tax refund returned.

Private Loan Tax Offset

If you have private loans and you fall behind, you don’t have to worry about not getting your tax refund; collectors of private loans have no way to seize the refund. However, your private loan servicer can take action to collect your loans much sooner than federal servicers can. Unlike federal servicers that can’t take collection action until loans are 270 days past due, private servicers can take collection action as soon as you’re late on just one payment.

If your private loans are delinquent, your private loan servicer can sue you for the ability to garnish your wages and freeze your bank account. Court approval is the only way a private servicer can take your earnings, so you have a much better chance of preventing it if you show up to court with a good defense.

How to Prevent Tax Offsets

If you’re approaching or in default on your federal student loans, it’s best to take action so they are not still in default come tax season. That means either curing the default through default rehabilitation or consolidation or entering into a repayment plan with more affordable monthly payments so you can work to stay current.

If you're not quite sure where to start or what to do, consider hiring a CFA to help you with your student loans. We recommend The Student Loan Planner to help you put together a solid financial plan for your student loan debt. Check out The Student Loan Planner here.

We break down the process to get out of default here: How To Get Out Of Student Loan Default In 5 Easy Steps. 

We'd appreciate hearing your thoughts and experience in the comments below.

Filed Under: Taxes
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Comments

  1. So I called the offset number to see who I owe it says I only owe one dept and that’s child support but it didn’t say anything about my student loan am I safe

    Reply

    • If you have an offset (for loans or child support), they can take any Federal payment, including your tax return.

      Reply

      • The department of Education stopped my rehabilitation program after 4 months I spoke with them and they say my application is being viewed and I asked them if my taxes were going to be taken and she says no. I filled out and application for my student loan to be forgiven completely because I had received a settlement from the school I attended for being mislead and promises that were made. Is it possible for me to still get my taxes if I call the offset number and it says I have no offsets and could my student loan be completely forgiven?

        Reply

        • If you’re still technically in default (according to your credit report), you run the risk of an offset. What harm does it make to sort out your loan issues first, then file your tax return?

          Reply

          • I went to college america in 2008. For computer science was told that I could get a good job if I were to get a degree in computer science and therefore make a future for myself fixing the mistakes I had made with the law well come to find out it would be nearly impossible to get a job in the career i was studying for with the felonies I have on my record. And then I find the credits from that school do not transfer if you wanted to go to a 4 year college. A lot went on there and I stopped going there. Well now that I filed my taxes this year I have an offset and they said they are taking my whole refund which I really need to take care of shit off notices and my daughters disabled. I want to go back to school though just not go through that school or that program I was studying for do you think they would give my loan back to finish school and give me at least half my refund back. And the other thing is college america only informed me about a Pell Grant for 3500 I was never aware of these other loans I think they were eefl or something

          • Follow the directions above in the article. You’re not likely to get your refund back, but you can take steps to avoid this going forward.

          • My student loans were in default,I started to work with a credit repair company and noticed the was a discrepancy with my student loans on my credit such as length of time I attended the school and the school saying I could obtain a job with my criminal record but obviously I cannot,I filed Jan 29, but disputed my student loans afterward, st first it said my refund was being deposited in Feb 27th now is saying it’s being used to pay for my loans, hows can that be when they are on forbearance while my case is being reviewed by the DOE?

          • If you’re actuslly in forbearance they shouldn’t offset your tax return. However, are you sure your loans are in forbearance as of Feb 27? I would check your loans online at the NSLDS and see. If they are truly in forbearance, then you can dispute the offset.

        • Can you please elaborate on the school being misleading, and making promises? Also what, where, when, and who, did you talk to to accomplish a win in your favor? I ask because now I have a student loan for what i feel the same as yours wasted time wasted money and no degree nothing to show for the 16,000 I have to pay back. Because I was lied to. Thank you

          Reply

      • hi, same thing happened to me!!!! I never got a letter from the Irs or US Dept of Educ saying they would take my refund!!!! And the damn loan is 27 yrs old ( and yes I have paid back some of it ) but never heard from them in over 7 yrs!!!!! It’s illegal that they just take the refund, and don’t even send a letter explaining this first, so a person has a chance to call reg this. They suck and I will contest it!!!!! And yes I tried calling them both in the last week or so, but of course u can’t get thru to anyone!!!! on hold forever !!!!!

        Reply

        • Sadly it’s not illegal – there’s no statute of limitations on Federal student loan debt.

          Also, it’s not the IRS you need to dispute it with, it’s your lender/loan holder. But they are legally allowed to, so it’s time to take action and get out of default.

          Reply

          • Hello so I have been in a rehabilitation program with doe. I filled a extension for my taxes. Everything was processed for them to deactivate my offset but haven’t yet what should I do

          • Typically you’re offset is cleared for sure once you make your first payment after completing rehabilitation on your new repayment plan. So that’s why we recommend waiting until that point to file your taxes.

            If you’re getting a refund, you have up to 3 years to claim it.

      • I started my rehabilitation program in November . It’s April so it’s been 5 months. I’ve called the offset number and it always says I have a loan but today it says I don’t. Does that mean I’m safe to file my taxes?

        Reply

    • So I filed taxes just to find out whole tax refund was taken. I never received a letter of offset and I even spoke with representative from law firm (of defaulted student loan) in August due to separate student loan issue and wasn’t notified by representative either. Even updated her with new address as they had wrong one on file. Is there anything I can do to fight this?

      Reply

      • For Federal loans they don’t need to notify you. It’s the law. The only thing you can do to fight it is get your loans out of default for next year.

        Reply

      • Same thing happened to me and i signed up for rehabilitation program and they said they would not take my taxes and i wake up this morning and they took them all.

        Reply

        • Correct – until you complete your rehabilitation and make your first payment under your new repayment plan, the government can still offset your tax return.

          Reply

          • wow i had the same thing happen-called navient they said they would not take my refund but today they did-i was in an income driven repayment-

          • The dept of ed and the collection company told me once i make my 5th payment out of the 9 in the rehabilitation program the offset would come off. Todd me it could take 3-4 weeks. That was 3 weeks ago and still nothing. Now the dept of ed isn’t even accepting phone calls. Im at a loss. Im about to be homeless with 3 kids.

          • That’s rare to have happen before you complete rehabilitation so I’d work hard to make other arraignments without your refund.

          • Thanks for this information I’m still waiting to get out default. I chose to consolidate my student debt made my 3 payments to Central Research and am now waiting to be transferred but it’s taking forever… Do you think I make this years taxes? Oh I did the standard consolidation

          • If you’re owed a refund, there’s no penalty for filing late. If you owe taxes, your student loans don’t matter they are in default because you’re paying. So, just wait it out.

        • Same thing just happened to me they took alll my tax refund and I have been making payments every month they draft money out of my account. So why take my refund!!!!????

          Reply

          • Are you making payments to rehabilitate your loan? If so, then you’re still in default and that’s why they took your refund. Read all the comments and my responses above.

  2. I have Tax topic 151 and I received my state taxes with no problem but they want me to call them with a reference number1242. I am confused

    Reply

  3. Just found out that I have a offset and my full refund was taken I did not get a letter in the mail, no warning that this was about to basically put me and my kids in a really bad spot. To the point that in 5 days we will be homeless. My question is I have all the documents that I need to do my hardship , and by the time they make a decision we will be out on the streets is there any way that this process to get my refund back go faster I am so scared I have 6 kids and one in oven. What should I do???

    Reply

    • That’s a terrible situation. You need to follow up on your offset and student loans. You need to then get out of default ASAP.

      Reply

  4. My defaulted student loans are being consolidated and I haven’t received a letter from the Department of Education last fall, so am I safe to file my taxes without them being taken?

    Reply

    • It depends on where you are at in the process. You sometimes won’t receive the letter until after the offset happens.

      Reply

      • I have been in loan rehabilitation since last year. I made all my payments on time and never missed one. I was told by the loan people my loans have to go to a new creditor cause I completed the loan rehabilitations program. I filed
        My taxes and called the offset number and it said I had one for 250 then I had another one with the state. Cause my loans still hvnt went to the new creditor will my full return be taken or just the 250 plus whatever I owe the state

        Reply

        • Sadly, since you haven’t made a payment under your new plan, you still may technically be in default. This is why we recommend you always wait until after you’ve made the first payment on your new repayment plan.

          Reply

  5. I am currently in a rehabilitation program to get my loans out of default. I filed my taxes and they took my entire refund. I was never notified of the offset. Can they do that?

    Reply

    • Yes, until you have completed your rehabilitation agreement, you’re still technically in default. Sadly, you probably should have waited to file your taxes (since you filed pretty early).

      Finish getting out of default, then you won’t have to worry about this in the future.

      Reply

        • If you’re expecting a refund, you don’t file an extension at all – you just don’t file. You only need to file an extension if you owe taxes. But, if you owe taxes, none of this matters because they aren’t garnishing anything.

          Reply

  6. If I’m in default but doing loan consolidation how long do it take to get out of default so i can file taxes?

    Reply

    • Every agreement is different, but typically about 3-6 months to be 100% complete and on a new repayment plan.

      Reply

  7. My student loan is in default. My bankruptcy was approved last August and I am in the process of going through a rehabilitation plan with DOE. I initiated review of my expenses to determine a payment plan October 2017 and started sending them $20 a month (5 consecutive payments thus far). However, they have continually requested additional information. Hopefully, I receive the approval over the next couple of weeks.

    The agent for the DOE noted that my pay should not be garnished nor should my taxes be offset. I’m hesitant to file my taxes as I do need this refund. What is the risk of filing my taxes now while they are determining my case vs deferring filing my taxes for another 9 months until I’m out of default/rehab status?

    Reply

    • If you’re expecting a refund there is no harm to you in waiting. If you owe, you need to file on time. I personally would be doing your taxes, ensuring that you get a refund, and then waiting. That way you know you don’t owe.

      Reply

  8. I am starting the rehab program. I have already successfully done this with another student loan that was a state loan not federal. Now Federal loan is going after my tax return. I started to file my taxes and put them on hold. I called the DOE and they said unless I am facing eviction or foreclosure, I can not apply for a hardship. Is this true. Because last year I filed a Hardship with the State Loans and was able to get my full refund back.

    Reply

    • You won’t get any type of exemption to the offset. You need to complete rehabilitation first so get your refund.

      Remember – tax refunds are also optional. You can adjust your withholding with your employer so you owe taxes – then you get paid more each paycheck and never have to worry about this again.

      Reply

      • This situation sounds like mine. How can I get an extension ?they’re being offset. While I was in process of starting income driven payments. Now I’m making 90 dollar payments every month and afraid to do my taxes DOE told me I could request an extension and I will be in good standing until I finish 3rd payment then I could do my taxes in October and get my refund .is this correct ?

        Reply

  9. My big tax refund was taken after I found that out I filed to make payment arrangements and get me out of default they haven’t taken my little tax refund yet am I in the clear so I’ll get that back called depaprtment of education and they said they’ll only take it if it’s participates in a certain program allowing them to take both state and federal taxes is that true

    Reply

    • What do you mean big and little refunds? Do you mean Federal and state? They typically only take your Federal refunds, not your state refunds.

      Reply

  10. I thought my student loans were in deferement and I have never received any kind of communication, written or electronic, that I was in default. Never received a letter about an offset from the IRS or the DOE but after my refund was supposed to be deposited and wasn’t there iearned of the offset. Am I not supposed to be notified of not only the offset, but that my loans were in default? My family is screwed.

    Reply

    • You should be notified, but that also assumes that all your contact information and such is correct. I would get a hold of your lender ASAP and see what’s going on.

      Reply

  11. I did not owe a student loan went to court 2x and student loan did dismissal stating I owe nothing and still taking my tax return. I never heard of Loan tax offset. Question? will this work for me

    Reply

    • What do you mean? You mean your student loan was dismissed and you’re still seeing your tax refund taken?

      Reply

  12. I have been in the rehabilitation program for my student loans now for 3 months…I waited to file my taxes until now. Will they still take my federal tax return?

    Reply

    • You must complete your rehabilitation agreement fully before you’re out of default and “safe” to not have your tax refund taken. What does your agreement say? It’s usually at least 6 payments (months), if not longer.

      Reply

      • Can you reverse the offset if getting major surgery and going to be disabled for 2 months? I was depending on this to pay my bills and child care. I have ovarian cancer and not going to receive any disability until May. I entered the rehabilitation program they took first payment. I heard while they read their script that you can get it back in 5 months if you continue to make your payments is that so?

        Reply

        • No, but if your income is zero your monthly loan payments can be zero.
          If you’re in default you need to rehabilitate your loans.

          If you are permanently disabled, you need to apply for a discharge.

          Reply

  13. My student loan will be out of default in September. I filed for an extension for my 2017 taxes and the deadline is mid-October I believe and I will be filing then. If I am owed a refund, will it still be offset?

    Reply

  14. I just made my last payment for the rehabilitation program so how long should I wait to file my taxes?

    Reply

  15. My friend told me .. h&r block said they can only take your loans once every 3 years.. is this true??

    Reply

  16. Hello, i am currently on offset of 4thousand. And im currently on the program to get off of default which will be on june 26th 2018.then my stuff will be switched back to dept of edu.and im going to get on a payment plan with them. How long do i need to wait untill i can file my taxes before December without them taking my taxes?please help

    Reply

    • After you’re out of default and make your first payment under your new payment plan, you should be fine.

      Reply

  17. Hi Robert. I hope you can answer a question that no one else has been able to answer. My yearly income is only about 30-32k. A few years back I encountered a financial hardship and my student loan went into default. As a result the IRS offset my tax returns. I haven’t filed any taxes for 3 years. I entered a repayment plan last year and as of this month my student loan is now out of default. My question is: When can I file my current and back taxes and get my full return without any money being offset? And is there a way I can confirm it will not be off set, before I file.

    Reply

    • Once you’ve made at least one payment you should be good to go. Make sure you consult an accountant to file your past taxes.

      Reply

  18. Why do they take a 8000 dollars income tax,rather then a 3200 ?This person was in the porcess of getting the student loan cleared,was cleared.

    Reply

    • When you get your tax return offset, it doesn’t just go to the loan, but also to collection fees and interest. Depending on the loan balance, very little may have actually gone to the loan (if any).

      Reply

  19. I’ve completed my rehabilitation program in April. Today, I just made my first payment with the new payment plan. I called TOP and the automated line stated that there were not any offsets against my SS#. How much longer should I wait to file my taxes? I rather be safe than sorry. I would like to get my tax refund this year 🙂

    Reply

    • Once you make your payments on your new plan, you should be fine and shouldn’t have any more offsets due to your student loans.

      Reply

  20. I have a student loan offset that has been seized for the past two years. I plan to return to school. Will my tax refunds continue to be seized while I’m a student?

    Reply

    • Yes, your tax refunds will continue to be offset as long as you’re in default. Furthermore, you can’t get any more Federal loans, and you likely won’t be able to qualify for any private student loans due to your credit.

      Reply

  21. I have completed 9 months of rehabilitation program, I am now being switched to another repayment program. When will I be okay to file my taxes with out fear of getting refund check garnished by Department of education?

    Reply

        • I will finish my rehabilitation agreement in October and I filed an extension … and I think the deadline to file with turbo tax is October … will I still be able to file my taxes in Nov or Dec? I just want to make sure the offset is taken off my taxes… and I read were you said to wait till you make your first payment on the new repayment plan?

          Reply

          • You can file a tax return for a refund anytime within 3 years. So, wait until you are 100% on your new payment plan and then file.

  22. Hello, my taxes were taken last year 2017 for $5,000 because my student loans were on default. This year, I gor an extension to file my taxes and as you know we have until mid-October. As of July 21, 2018 my loans are out if default and back in good standing and today I made my 1st monthly payment after the rehabilitation program. I called to check if there were any offsets still and the offset for 2017 ia still showing for $5,000. Am I still at risk for my refund being taken away this year?

    Reply

  23. I saw on several post that it will be ok to file your taxes after you are making payments on the new payment plan. I’m unsure of what this is. I supposedly made my last payment July 16, 2018 to Performant (a collection agency for USDE), as well I’m on the income based program with Nelnet. I’m very confused. I completed the 9 month rehab with Performant, USDE says I’m not in default, but the offset 800 number says I still have a debt. I don’t know what to do . Please help

    Reply

    • Give it a few weeks and you should be fine. It hasn’t even been a month since you cleared your loan out of collections.

      Reply

  24. Hi Robert, I hope you can help/give me some clarity. I’m concerned following all the research I’ve been doing about tax offsets. So, last year my Federal AND State refunds were offset (about $2,500 in total). At the time, I was not in any rehabilitation program and my wages were also being garnished. Fast forward to now, I finished paying off the loan related to the garnishment and was no longer having any wages taken as of 3 months ago. I also started a rehabilitation plan with the third-party collector and have made 5 consecutive on-time payments. I am also currently unemployed as of one month and a half ago. I am hoping these three things together will be enough to avoid another $2,500 offset this year. I am filing the Treasury Offset Request for Review paperwork this weekend, although I have not received any notice saying they were planning to offset (I didn’t receive any notice last year either, despite being offset). Additionally, I called the number to see if I would be offset. The automated message only mentioned last year’s offset, it did not say anything about an offset connected to my social security number for this year.

    Reply

  25. I’m in the rehabilitation program I have one more payment to make which I will do this in a couple of days. My tax advocate just sent out my tax papers today I do believe. So my final payment will be made b4 the DOE receives it. I wanna know if I will be getting anything back. Plus it would help since I’m also a single father of 2 kids.

    Reply

    • It’s very close to call. We don’t recommend submitting your tax return until after you make your first payment under your new repayment plan.

      Reply

      • Last rehabilitation payment paid last week still waiting on the other agency for my repayment plan after the rehabilitation program… Still I haven’t received anything regarding an offset or anything… And I first filed back in February and once again in April and nothing yet.. We r almost in September now

        Reply

        • And also I called the offset line and it told me I had 2 offsets. And those offsets were taking out last year and one of them was for child support and I know I don’t owe anything and I talked to the dcs representative she said my case was closed since last year.

          Reply

  26. What does it mean if Its showing I have 2 offsets but the offsets that r showing are from last years tax season. Saying I made payments in February and may of last year. And one of the offsets is for child support but my child support case has been closed for a year cuz I paid it all off last year

    Reply

  27. Hello my problem is this. My loans were in deafult last year and $7200 of my refund was applied towards my student loans. I am on a rehabilitaion repayment plan now. And current. I have made have made 3 payments. Will my tax refund be offset as well?

    Reply

    • Once you complete your rehabilitation program and make your first payment under your new repayment plan, you should be good to file your taxes.

      Reply

  28. I wish I would have read all this before today. I was told as soon as my loans were out of default I could file my taxes. That they could not take it. I sent them in today. I was just out of default last Saturday. I haven’t made a payment on a new plan yet. I called the offset number. I have one account in offset. They’re still going to take my money aren’t they!? 🙁

    Reply

    • It’s a risk that they will – it’s all based on how fast your paperwork to remove the offset and default process versus how quickly the IRS processes your return.

      Reply

        • You can try to dispute it, but that’s a hard dispute because you’re not out of default until all the paperwork is processed and you’re making payments to your new lender.

          Reply

  29. I am done with the rehab payment program as of 09/010/2018. I spoke with AFS and they stated my loans were out of their hands. with that being said, should I file my taxes? I haven’t started a new payment plan yet.

    Reply

    • To be safe, we always recommend waiting until you’ve made your first payment on your new repayment plan.

      Reply

  30. So I just made my last payment on my rehab default they now have switched me to a new Leander. And I am out of default. I have not made a payment to new Leander and have already filed my taxes will they take my refund ? I called and still have an offset they told me it could take 2 to 3 weeks. What can I do if I get my tax refund garnished ?

    Reply

    • It’s hard to say. You have two different organizations processing paperwork, and who-ever wins gets your money. That’s why we recommend waiting until you’ve made your first payment under your new repayment plan before filing your taxes.

      Reply

  32. How do I go about getting the offset reversed? I am doing a reabillitation program and the representative told me that my student loans were not in jeopardy of being garnished or taken by the irs. Especially agreeing to go into the reabillitation program and making payments. I keep reading that being in a rehabilitation program is a valid reason to reverse the offset from the irs, but from what I have read on this website it seems almost impossible. What the the reasons to which the irs wouldn’t reverse the offset being in a rehabilitation program, or what factors WOULD make the irs agree to reverse the offset?

    Reply

    • They won’t until you’re done with your rehab program and make your first payment under your new repayment plan. Easiest way to avoid that is not file your tax return until you’re rehabilitated.

      Reply

  33. I was already aware of my offset my question is I just filed my taxes for 16&17 2017 was for 5757 and that was offset but 16 was for 2800 they took 300 from that but I got the rest I wasn’t expecting a return at all cause I knew about my offset i still have to file for 2015 am I in the clear to get a return or no?

    Reply

    • You need to call and see if you still have an offset. If you do, then you’re not clear. If you don’t, then you’re clear. If your loans are still in default, you likely have an offset still.

      Reply

      • Why wouldn’t they take all of my 16 return? I don’t get why I received a return which it should of went to my student loan i called the offset and I don’t have an offset but I called my collector and I owe 1,400 still which is why I’m confused I got a return

        Reply

  34. Ok. My student loans I guess have been in default since 2000. And at that point a tax refund was taken and I personally went to a IRS tax office to be sure I had no other outstanding balance with DOE to ensurey tax’s would not be taken again. Now fast forward I filed taxs for year 2013 and received a tax refund. Then didn’t file again until 2016. Then they was taken. Once again 2017. Cunfussimg as this sounds it is because I dug in to amount of my loan and discoverd that I owe an alarming total. And seemed to be a larger amount granted for the loan then I received when I was in college. Needless to say I not once ever filled out for any type of loan the entire time I was in college nor was I eligible for assistance because ofynparents income was to large. I understand there was some type of loan u still can get but if my parents paid for my tution every semester how could they issue a loan 1st of all I never applied for bit was told that “I had some money at the cashier office on campus and go pick it up” Any 18 year old going to spring break would sign there soul away not knowing the grave mistake they was making
    Some I admit that I received a check in amount of 1200$ around April of 1996. But never applied for it then lastly after have rough spot in life a being incarcerated in 1998-2000, some type of form was filled out looks like on my behalf bye Good knows who and was totally not valid
    I have the forms where I sent a had a letter notorized stating I didn’t do all this and sent copies of forms. Better yet in 2001 the IRS told me I had no other outstanding balances with them. One letter I received back said there finding showed that I am responsible for entire loan. Im broke at a low paying job because of being an convicted felon bye the Untied States of America. Repaidy debt to society in anform of 10 years in Federal prison. Any type of guidance would be helpful. On a ending note a 1200$ whatever u call it gave to a 18year old kid 22years ago I guess as grown to an 8000$ debt to DOE and isn’t Decreasing bye any amount due to collection agency charges. Please, Please Help me anyway u can Thanks..

    Reply

    • You need to follow the directions on the article above – get out of default by rehabilitating your loans and making payments on a payment plan.

      The reason you’re not making any progress is that these tax offsets are going to interest and collection costs. These continue to grow every year, and when you file takes again, it barely goes to cover these. Your loan balance will continue to grow until you take action on the loan – even with the tax offsets.

      Reply

  35. I called the offset number and it says I have no offsets but could change as they’re added daily. I pressed the option to hear about debts and it told me about my student loan. Will they still take my refund if it’s a debt and not an offset?

    Reply

    • Hello I have a question I have a student loan from 7yrs ago an I called the offset line an it says I don’t owe anything an on my credit karma it say charge off. Will they still take my tax return?

      Reply

  36. How do I know if my taxes will be taken? I always get a refund and am confused I have no garnishment and I spoke with a 3rd party who was going to enroll me into a forgiveness program and she couldn’t see anything stating they would take it. I need my refund so I am just wondering how I can go about finding out if it will be taken from me? I am enrolling in a rehabilitation program today so if theyre going to take my refund I’d rather file for an extension.

    Reply

    • If you need to rehabilitate your loans, that means you’re in default. If you’re in default, you’ll likely see your taxes offset.

      Reply

  37. My student loans are currently in loan rehabilitation (3 months in out of the 9 months), am I still at risk of them taking my federal tax return?

    Reply

    • Yes, you will have your tax return taken until you’re out of default and fully rehabilitated. My suggestion is to wait until you’re done with rehabilitation, make your first payment under your new repayment plan, then file your tax return.

      Reply

  38. I was never notified of my student loan being in default never got a letter. I was in prison for over ten years and never gotten a letter, I got out, got a job and have a family. Call DOE and they said I made a payment which they offset last year’s taxes but my balance is the same WTF why is that even possible and nobody giving me answer and when I ask to talk to some one that can help me they give me the run around…what can I do who can I call.

    Reply

  39. Hi, my my wages are currently being garnished for my student loans and I’m now in a Rehabilitation program. I’ve made 3/5 required payments to have the garnishment suspended and elig to make a regular payment plan. I’m curious about how long it will take to remove the treasurey offset once i complete the 5 payments and if I’ll more than likely need to get a tax extension and give it a few months.

    Reply

  40. Hello, I too discovered an federal offset the hard way! I’ve graduated from my rehabilitation program to a new lender in October. I’ve been making payments to the new lender ever since. As silly as this sounds, I’m also curious to know if it’s safe to file without fear of being offset/garnish?

    Reply

    • Yes, if you’re on your new payment plan and out of default, you should be fine. You can double-check the offset hotline as well.

      Reply

  41. So I have a question, I defaulted on my student loans of about 25,000, over the past couple (2-3) years my tax refund had been taken and applied to that. I am out of default on my credit report and owe just little over $5,000 left. With me being on good standings does that mean they will still take this years return as well or am I good to get the refund? I have 2 kids and I’m due in March with my 3rd.. I really need this money I can’t go another year without it.

    Reply

    • If you’re 100% out of default because you completed rehabilitation or consolidated your loans, you are good to file. You can always call the offset number to validate.

      Reply

  42. This is so confusing. I consolidated my college loans, have a $0 amount payment due since November. So this counts as monthly payments for 3 months now, right?
    How do I find out if the offset has been removed? When I called it said my total loan amount and what the offset/took in 2016, it says nothing about pending. I have not yet filed for 2017. Is it safe to file now? Or do I have to wait until they give me a real dollar amount to pay? Reading through other’s comments, I see 3 months, 6 months and 9 months; which is right? thank you

    Reply

    • If you’re on an income-driven repayment plan with a legal payment of $0, then that counts as a payment. You can call the offset number and validate the offset has been removed.

      Rehabilitation typically takes 6-9 months, and you would know if you’re completed with it because you would be back with a major loan servicer and on a specific payment plan getting monthly statements reflecting that.

      Reply

  43. So i called the irs off set line to see if they’re still taking my taxes from student loans and it said there was nothing listed. So does that mean I’m ok to file my taxes and that i should get my refund this year?

    Reply

    • Should be if there wasn’t anything listed. Are you expecting there to be something? Did you change anything from last year?

      Reply

  44. If my last payment for the rehabilitation program is in March. How often does it take to get to a new lender so I could make my first new repayment plan I would like claim my taxes but want to be totally out of the woods.

    Reply

    • Last rehabilitation payment is in March, first payment under your new lender/repayment program will be in April. Then file your taxes.

      Reply

      • If I complete the three consecutive months of payments on my rehabilitation. Can I file my taxes then? Or will the still be taken?

        Reply

        • Most rehabilitation agreements are six or nine months. I’ve never seen a three month agreement. Are you sure that you only have a three month rehabilitation plan?

          The bottom line is you want to wait until you make your first payment on your new repayment plan – NOT the rehabilitation plan.

          Reply

  45. So I’m currently in the rehabilitation process last month for payments is February 15th… I spoke today with the agency that I am making my payments to as long as February payment is made they will not take my taxes. I called the hotline and it states that I don’t have any offsets. But obviously my student loan is in default since I am in the rehabilitation program. Question is will they still take my taxes if I file tomorrow since the line is stating I do not have an offsets?

    Reply

    • We recommend that you wait until you make your first payment under your new repayment plan. Especially with the shutdown there may be delays in getting your paperwork processed. The best thing you can do is wait and file after you’re on your new plan.

      Reply

        • Once you complete your loan rehabilitation agreement (for 9 months), you then are transitioned back to a regular loan servicer and you resume payments under a regular income-driven repayment plan. You should wait until this happens before filing a return.

          Reply

  46. Hello,
    I had my taxes offset 3 years ago and entered the rehabilitation program paying 5$ a month for 9 months which took me out of default. I left it the way it was and never followed up. This October 26, 2018 I received a letter stating that DOE holds my defaulted student loans for offset again, today I called the new debt collector which now added another 3,500$ on fees to my loan making it 17,000$ total. They told me I wasn’t eligible for another rehab program and can make monthly payment arrangements of 143$ a month and I would be taken off the offset immediately after I made that payment of 143$ authorized by the manager I asked him and he said that the representative had misinformed me and she read me the offset rules again saying that I would pay 143$ for 12 months and then call again and work on another suggested nation wide average payment meanwhile I would still remain in default for lifetime of the loan, but my offset would come off after 5 full payments starting today. IRS owes me 6,000$ this year, another option was debt consolidation and they said something about 3 months…. I already made the 143$ payment I’m a little angry that she told me the offset would be gone after the first payment. What should I do? Also my credit score has jumped from 540 to 770 in 2 years…. it seems this loan for 11,000$ which i got in 2007 (today is 17,600$) has fallen of my credit report, by making this payment am I opening another can of worms? And is that true that after 5 monthly payments of the 143$ the offset with be gone?

    Reply

    • After your rehabilitation program three years ago, did you just stop making payments? If so, then it makes sense you’re in default again.

      You have to get out of default AND then continue paying off the loans.

      Rehabilitation is a one time thing. If you did it once, your only option left is to consolidate your loans again. Your tax return will be offset again until your loan is out of default.

      You can still get your tax refund, just consolidate first and get back on track, then file your taxes.

      Reply

    • Hello,
      I received a letter from Navient saying that I completed rehabilitation and was in good standing. Do I have to worry about my taxes being off set. I haven’t filed yet.

      Reply

  47. I have a defaulted federal student loan but I have recently entered in the loan rehabilitation program but I am waiting for NC to change my status from default. I have been trying to do this since March 2018 and they were just giving me the run around I was successfully entered in the program in Jan 2019. Is there any hope of getting my 2018 tax return? The offset number I called still says i owe a debt for student loans. Is there any way to fix this because I did my part for the loan rehabilitation they just dragged their feet for months so it couldn’t be completed.

    Reply

    • You have to complete rehabilitation first – so after you make your 9 payments and start making payments under your new repayment plan, you can file your tax return.

      Reply

  48. If my weekly checks have been getting garnished due to a pay raise and i’m now eligible for that to happen, would it be possible to file to see my tax return again now that a good portion of my checks have been going to paying off my college loans for the last year or would it be a pointless attempt?

    Reply

    • No, you need to get out of default first. Also, the garnishment of your wages is likely barely going to your loans – likely just going to interest and collection fees. So, you are honestly just throwing your hard earned money away!

      Go get out of default and start making payments, then you can file your tax return and get your refund once you’re out of default.

      Reply

  49. Hey Robert,
    Possible quick question:

    Last year I had an offset and still filed because I started a rehab payment plan and thought that would help. It didn’t. Anyways, I fell on hard times and my account went back into default.

    I got a letter in the mail today from the lender saying “Participating in loan rehab can prevent wage garnishment and tax offset. Additionally, successfully completing loan rehab can remove the default record from your credit”. I called TOP and I don’t have an offset. I’m going to call the lender tomorrow and get on the rehab program again before they assign an offset. So, is the letter true? If I get on the program now, will they not offset me? Or is it just a ploy to get me to pay again and they will still offset me here soon anyways?

    Thanks!

    Reply

    • They will offset you if you’re in default. You need to complete rehabilitation.

      Also, I don’t believe you’re eligible to rehabilitate again – it’s a one time deal and you failed the first time around. Your only option left is to re-consolidate your loans.

      The only thing that’s going to help you is to get out of default (and you need to do it anyway beyond your tax refund issue).

      Reply

      • Apparently it was through a different lender or something because I was able to enroll in the rehabilitation program. I made the first two payments and I also paid the original lender a payment as well.

        It said in the letter that participating in loan rehab can prevent tax offset. Why would they say that if they are just going to offset me anyways? I’ve been checking the treasury line the last week or so and still no offset. Is it possible that they won’t offset me? Last year by the time I got my w2 and called the treasury I had an offset.

        Also, what do you know about the hardship paperwork you can send in to get your tax refund back after they take it? Does it usually work?

        Reply

        • It’s about completing rehabilitation – you’re still technically in default until you complete the rehab program. We recommend waiting until after that first payment is made on your new plan to ensure you’re safe – government bureaucracy and paperwork take time.

          If you file your taxes jointly with a spouse, your spouse can file for injured relief and definitely get her portion of your tax refund. As for the hardship paperwork, typically doesn’t work unless you really have some extenuating circumstances.

          A better idea is to get out of default. And also to adjust your W4 withholding from your paycheck so you’re not getting a big refund, but rather get bigger paychecks.

          Reply

  50. I completed my 9 month rehabilitation program back in Nov 18 it was transferred back to Navient. I talked with Navient and they said I had 3 more payments of $5. I made a payment Jan 7 and now have Feb, Mar. I kept asking if I file my taxes will I be offset they reassured me that I would not. But to check the offset list to be safe. who do I contact about offset list?

    Reply

    • Once your rehabilitation is complete and you’re back with Navient, you should be fine. But you can all the number in the article above.

      Reply

  51. I recently learned of a offset of my students loans. I have NOT filed my tax return yet however a few weeks ago I consolidated my loans (before learning my refund would be offset) will consolidation clear my offset so I can file?

    Reply

    • Yes, it should clear your offset. But you should wait until you make your first payment on your new consolidation loan.

      Reply

  52. Hello I just Realized that my tax refund is in offset due to unpaid student loans. I called and got into a consolidation program. I have to make 3 payments 20 days apart and then will be sent to a new lender. They are saying 30-60 days ( they couldn’t say if that was after my last payment or not). I do not work and have no income. My husband works an all the income we report on our taxes is his. Is there anyway to know how long it will be before the offset is lifted and we can file? Also is there any way for him to file without the offset effecting him. Can we file with me being a dependent and then amend later after the offset is resolved?

    Reply

    • Is there anyway to know how long it will be before the offset is lifted and we can file?
      The offset will be lifted when you’re completely out of default. This means you have a new loan on a new repayment plan. That’s why we recommend you make your first payment on your new loan before filing. That 60 days is about right, but we would recommend 90 – that extra 30 days to make your first new loan payment.

      Also is there any way for him to file without the offset effecting him?
      No.

      Can we file with me being a dependent and then amend later after the offset is resolved?
      No.

      Reply

      • Is that 30-90 days once I started the process? I started this past week. So would that mean 30-90 after that date or 30-90 days after the last of my three payments? Thanks for your help!!

        Reply

  53. A little confused about the offset line & debts owed. I completed a rehabilitation on my student loans last year and have been making payments to the lender that took over the loan for about 4 months now. I called the tax offset line and it says “we found one tax offset, your 2017 taxes were offset in the amount of $x.xx (my full refund) by the department of education any questions please call them at xxx-xxx-xxxx. But then immediately after this information it says “We have found no debts for the social security number entered, but we add debts daily”
    I’m assuming this means I have no debts for 2018 taxes? Why are they giving me the info for 2017 though? I never had them list the prior years info on the tax offset line. I’m so confused. I listened to the recording 3 times to make sure I was hearing it correctly. Can anyone tell me what this means? Thank you!

    Reply

  54. I called the TOPs hotline and it says I have one debt that may be offset, does that mean my return will definitely be offset. I didn’t receive a notice. My student loans had been sold and I only finally figured out who had them when I called the hotline.

    Reply

  55. Last year my tax refund was taken with the exception of like $1,300. They said it was offset for student loans and they sent me what was remaining. When I filed this year I got an offset code along with my DDD for my return. When I called the offset line it said it was for almost $3,500 for department of education….why is that if they took my refund last year and I got some back after they took it?

    Reply

    • If you didn’t take any action on your student loan to get it out of default, your loan spent the year growing, adding collection costs, and more. That small amount they took didn’t cover everything, and so now you’re in worse shape.

      You have to get out of student loan default ASAP!

      Reply

  56. Hello,

    I am currently in a rehabilitation program. The person who I am dealing with in the collection company said since I have made 5 consecutive payments and have turned in all the proper paper work that my loan accounts should be taken out of the offset program. When I call the Treasury Offset number I only hear information from the offset from last year, not this year.

    What should I do?

    Thank you

    Reply

    • You should wait to fully complete rehabilitation and make your first payment on your loan with your new servicer before filing… just like we say in the article above.

      Reply

    • They said the same for me fhcann associates they told me after 5
      Consecutive payments u are in good standing and can file, but I’m going to call the dept of education just to make sure it’s off

      Reply

  57. Hi, l completred a student loan rehabilitation program in October of 2018. The company that now has my student loans received the letter and dismissal from default december 28th 2018.

    I had to call the IRS to get paperwork and had them check my status. They say I am still flagged for garnished refund.
    How do I get that off the record ?? I didn’t file my 2017 taxes because of the default. And will be filing both at once. I don’t want to lose all of that refund.

    Thanks !

    Reply

    • Make your first payment under your new repayment plan. Give it a bit of time. The government shutdown delayed a lot of things…

      Reply

      • Hi,

        My first payment is in forebarance because I’m a full time college student.
        But now bc of all of this defaulted loans not updating I can’t get my financial aid. I’ve faxed, emailed, called everyone I can think of.

        Can I fax the loan out of default letter to new York state higher education and IRS?

        Reply

        • You would be in deferment. That’s fine, just wait until you get your first monthly statement then (whether you have to pay or not).

          Reply

  58. I received a letter that says it’s from US DOE about possible withholding of 15% of my SSI. When I called the DOE they said it was turned over to a collection agency (Coast Professional) I have no had contact with or received any paperwork from. So I called the Dept of Treasury and they said there aren’t any current offsets when I entered my ssn. I’m confused if this is a possible scam. The Department of Treasury Logo is not one on the website or in the correct color. I’m trying to find out if it’s a scam who do I contact? I have called the. Scam number and it lead me to some constant ads they wanted me to sign up for. I just want to get to the right people and I’m on a goose chase for info.

    Reply

    • The question is, are you in default on a student loan? If yes, then that makes sense. You can find out who owns your loans by following this guide: How to find your student loans.

      Once you’ve found them, you will se garnishments if you’re in default. You need to get out of default to fix this.

      Reply

  59. Does the DOE not put there offsets on the offset number. It says I have no offsets at this time under my social but when I just made my 5th payment through the rehab program they said I have to wait 3 to 4 business days for payment to post and DOE still has a offset on my file and after this payment goes through. they will update with DOE and they will lift offset. I’m just wondering why the DOE offset does not record on the offset number?

    Reply

    • We’ve found the offset number to be unreliable. If you’re in default, it’s a guarantee you’ll be offset, but not a guarantee you’ll be listed on the number.

      Reply

  60. I didnt get notice of an offset. I check my mail religiously
    After filing, I found out that I have an offset. I’ve been working on loan consolidation. The consolidation isnt ready yet, but I’ve made my 3 payments and the consolidation is in the process.
    If the consolidation goes through before the irs happens to process my tax return, is there a sliver of a chance I could get my refund? If theres a chance, is there anyone I should asknt ohhh call the irs or treasury dept or whoever?

    Reply

    • If the consolidation goes through, maybe. But why don’t you just wait another month or two to file your tax return?

      Reply

  61. I am currently in the process of consolidating my loans that are in default. I called the Tax Offset Program number and it says I have no offsets at this time. How accurate it that hotline? I did receive a letter that stated a possible tax offset would happen. Then I started the consolidation process which isn’t complete yet. Even though the TOP says I have no offsets should I still wait to file for my refund? Also, does everyone do a Rehabilitation first before you get your income driven payment plan? Thanks in advance!

    Reply

    • The hotline is 50/50. The letter is accurate.

      Complete the process of consolidation 100%, make a payment on your new loan, and then file your tax return.

      Reply

  62. I have a offset but I paid all of my federal loans off the offset is for state loans they already took my state’s tax refund so are the going to tax my federal to

    Reply

  63. I’m alittle confused. I am currently on a rehabilitation program for my defaulted student loans. I was aware that they could still possibly take my Federal refund, which was ok with me considering the amount I am supposed to receive is well over the amount owed. Today I checked on my state return and it says I will not be getting a refund. When calling the number to check about an offset it said that my state refund was taken and applied to my to DOE. Can they take your state taxes for a federal loan?

    Reply

    • Yes, they can take everything. And offsets typically don’t go to cover what you owe on the loan – they go to collection costs and fees, accrued interest, and more. If you don’t take action to get your debt out of default, this will keep happening.

      Reply

  64. I just started a rehabilitation program for my federal student loans. I have made my first payment and they said to call the Offset number to check the status in a few days (this was last week.) I just called the number and it says I have no Offset. Am I ok to file my taxes or would I have to wait a couple months when the rehabilitation is complete?

    Reply

    • Our recommendation is to fully complete your rehabilitation if you want to get your refund. Anything else is a risk.

      Reply

  65. Hi is there anyway I can stop them from taking my federal taxes they took my state last year to that’s when I found out that I had a offset what can I do so they won’t take my federal taxes and why didn’t they just take the money when I paid off my federal taxes back in 2007

    Reply

  66. My student load was in default and I didn’t get a return because they took it. Do I get credit towards the total amount owed after they have taken my money? What happens with the money I was supposed to be returned?

    Reply

    • The money they took goes towards your student loans – but most (or all of it) will go to collection costs and fees, and accrued interest. Rarely will you see any actually go to your loan balance. Your loan will still continue to grow and be a problem until you get it out of default.

      Reply

  67. My loans are in default and I call the númber for offset and even called the 3rd party and I still don’t have an offset and a lady told me that on March 10 I will know if I am in offset and that I am ok to file my taxes as long as it’s before March 10th is this true or they will still take it away even though I have no offsets yet

    Reply

    • Your risk is very high. If I was to gamble on your scenario, I would put all my money on you having your tax return offset and taken.

      Reply

  68. How can I get a data sheet of all of the past taxes that have been taken to pay off my loan versus how much is left and also to see if it is going to the debt itself instead of just the interest? I’m trying to figure out exactly how long it will take to pay it off entirely. I have financial hardship, not documented but would like to get out of debt!

    Reply

    • You finish rehabilitating your loans 100% before you file your tax return. That’s what we say in the article above…

      Reply

  70. I am in a payment agreement with the debt collector of my student loans and they take money monthly. But yet all my refund was taken. Can they do that? I have a letter stating them taking money out of my account?

    Reply

    • Yes, until your account is out of default, they can totally take your government payments. That’s why we recommend waiting until your out of default before filing your taxes.

      If you’re just on a payment plan, not rehabilitation, this will continue to happen.

      Reply

  71. So here’s my situation. I have two different loan holders. I have completed the rehabilitation process with one, and am in the middle of the consolidation process with the other one. A couple of weeks ago, my SSN was showing up in TOPS as possible offset from the DOE. Now I’ve checked back every day, several times a day, since Thursday and it’s saying there is no debt associated with my SSN. As I stated, I’ve completed rehabilitation with one holder of multiple loans, and I’m in the middle of the consolidation process with the other one, but it’s not complete yet. Since TOPS showed a debt but now it doesn’t, is it safe to file my taxes? I’m looking at a RAL because I had a situation arise that is requiring me to have about $500 by the end of the week. If I didn’t need it so bad, I would just wait until the consolidation was complete too, just to be sure. But I really can’t wait anymore, so I’m hoping TOPS is accurate.

    Reply

      • Thank you for the help and quick response, and all the help you lend on here! Just one more thing… I called the IRS and the Bureau of Fiscal Services, and actually spoke to a person at both, both saying I’m good to go to file my taxes. I also called the loan holder of the one’s I’m trying to consolidate who says I am “certified” for an offset. The only one I haven’t called is the Dept of Edu. First, what does certified mean. Second, why is the loan holder showing it but not the IRS or the BFS? Is it possible it just hasn’t made it to them yet and the previous offset was for the one’s I successfully rehabilitated?

        Reply

  72. Ok , so I have many questions! Back in 2013 I was told for my daughter to get more of a loan for her stafford loan I would have to apply for a parent plus loan . I was reassured that I would be turned down since my husband was on disability and only worked part time . Needless to say that was a lie . This happened every year . So hear I am in major and I mean major debt for parent plus loans !!! Which should be illegal to begin with , seeing how we have no income other than my spouses and now my credit is total garbage . The past 3 years I have been on the income driven plan with $0 payment plan . I worry every year that they will take my taxes that we literally live off of. Is there anyway I can get the loans dropped since my spouse receives disability and will be on it for his entire life ? Any help is greatly appreciated!

    Reply

  73. I never received a letter in the fall about my federal being taken. My federal tax return was taken last year, but I entered into a rehabilitation program for my defaulted loans in January 2019. And I haven’t received a letter about the department taking it again. Should I expect them to take the refund again, and can I fight them taking the refund since I’m currently enrolled in the rehabilitation program?

    Reply

  74. I just noticed all of my federal refund will be taken because of default. I just started working again in December. We had filed for divorce in August, but have received no help from him for our kids til this day. All of the income from takes was for my ex. We filed married filing jointly. I also have extreme hardship since I was unemployed for so long. I started a new repayment plan and the first payment has been made, but it was made a few days after I filed. I desperately needed the refund. Would the best way to get it, is to go back and get his portion back since he was primarily the one working? I have 3 kids and needed that to catch up on bills and not lose my house. Any help is appreciated.

    Reply

    • There’s no way to get it. If you’re rehabilitating your loans, you need to complete this process first – 9 payments, then make your first under your new repayment plan. So you’re looking at 10 months before it’s safe to not see your tax return offset.

      Reply

  76. Hi, Robert, I wanted to know how to go about this I had been doing a financial hardship deferment With NELNET student loans I normally renew my student loan in Dec. So in 2017, I went online to print off the form to mail in. I never heard anything back normally they send out a letter letting me know that I am in deferment and how long it will last. Now I’m being told I filled out the wrong docs and that my loan was returned to DOE in 2018. I called the offset number to check to see if I owed a balance None of January had a balance the day I go file my taxes after they have been filed it says I have an offset I’m hearing some ppl say they wouldn’t take them your first year and then I called the collection agency who has the debt for DOE and he has given me two options rehabilitation or consolidation neither will work for my situation if they are going to take my entire refund. What options do I have to not have my refund taking?

    Reply

    • If you’re in default, they can take your refund – plain and simple.

      Rehabilitation is the best option. Consolidation is a runner up. You need to do this because honestly, your tax refund will become your smallest financial problem if you keep ignoring it.

      If your income is low enough, your legal student loan payments could be as low as $0. Read this: https://thecollegeinvestor.com/22174/student-loan-default/

      Reply

  77. Same person I was also never notified I called to update my address wit nelnet thats how i found out my loan was returned to DOE. They never contacted me by mail or email for notifications. I was homeless for 3 years with 2 kids living in cheap hotels I finally have a place and I needed that refund. What can I do to get the refund?

    Reply

    • The only thing you can do is get your loans out of default. You can also adjust your W4 withholding so that you don’t get a big refund, but rather bigger paychecks.

      Reply

  78. Just because your debt is in the treasury offset hotline does it mean your tax refund will be withheld or are they just letti.g you know what debts you owe?

    Reply

  79. So me and my husband filed jointly and this year my student loan defaulted. I called the company FH CANN that handles collections. Set up a plan and will be off the default status after the months I paid for it.. question is when me and my husband filed our taxes this year we filled out the injured spouse form that is supposed to cover him and my child from getting offset. How accurate is this? Or has anyone else done this?

    Reply

    • It works, but the amount of the refund will be prorated to reflect just that amount.

      Second, you could have just waited until you were out of default and got the whole amount. You’re never going to get your portion back and that money is just going to go to waste.

      Reply

  81. The tax return has been withheld for 3-4 years. My student loan balance has not reflected those payments. I don’t understand why? I can’t even get a real person on the phone to ask why.

    Reply

    • Yes, those offset payments go to collection costs and accrued interest – rarely to your loans.

      The only way to resolve this is to get your loans out of default and start making payments on your loans.

      Reply

  82. If you call the offset number and they say you have a debt does that mean that they will DEFINITELY take your tax refund? Also when they say “debt” is that an offset?

    Reply

  83. I started on a voluntary repayment agreement a couple months so I’ve made three payments so far to the default rehabilitation program does that mean I’ll still be offset or will they see that I’m making payments to the rehabilitation program?

    Reply

    • You need to complete rehabilitation and then get back on a normal repayment plan (i.e. be out of default), then you’re safe.

      Reply

  84. I’ve just started the Rehab process. I didn’t know I would be offset for my returns this year… is there any way I can keep them from taking my refund?

    Reply

  85. I completed my rehabilitation program and called the offset line and pressed option 1 to see if I had any offsets. It said NO, I had to call the IRS to get some information about my taxes and was told I had a hold on my taxes for a debt, she told me to listen to option 1&2 that I didn’t do the 1st time and it said I he 2 debts. Long story short I had 2 different lenders and all my other 8 loans were in good standing except 1 with College Foundation. I am so upset because the simple fact I’m confused as to why all my loans were not with US DOE. So my question is, “is there anyway I can just get them to take half of what I owe and make Payment arrangements? “

    Reply

  86. I defaulted on my student loans and apparently missed the deadline to make arrangements towards repayment and may be subjected to my taxes being taken. I haven’t filed my taxes yet. My student loans are in collection. If I make a payment arrangement with the collection agency, will they still take my refund?

    Reply

    • Yes, they still will take your refund. You need to complete the process and get out of default to be safe.

      Reply

  87. i recently just applied for a loan settlement with 90 days to pay it but i did this after I already had an offset on my tax refund, will they still offset my refund after the settlement aggrement has been approved, and if so will it be for the full amount or the settlement amount?

    Reply

    • A settlement doesn’t change the offset. Only rehabilitation or consolidation will. However, once you settle, the loan should be done and paid so then it will be clear.

      Reply

  88. I owe 10,000 in student loans and am in the process of consolidation but have not completed I am expecting them to take my taxes so if they take my full 8,000 that would only leave me 2,000 left to pay do you know if it would go straight to my loans and if it will come off of my credit report?

    Reply

    • They would take the full amount, and it would mostly go to collection costs and fees – so very little if any would go to your loans.

      My suggestion is that you wait until you complete the consolidation process and get out of default, then file your taxes, then use that money to pay off your loans.

      Reply

  89. I Am Currently In The Rehiblation Program And They Took My Tax Check I Was Not Notfied By The US Department Of Education I Make My Rehiblation payments on time every month. I am not sure what to do at this point!

    Reply

    • They will still take your refund until you complete rehabilitation and are back on a normal repayment plan.

      Reply

  90. My loans got sent to a collection agency and I have been making payments to them for at least 6 months but now my return is being taken is that ok?

    Reply

  91. I have made my first payment on rehabilitation program for a federal student loan. When I call 8003043107 it still says I have one offset with doe. Should I wait to file this year’s taxes till it says there isn’t an offset when I call ? Or will it be okay because I have already made a payment. How long before the IRS is notified I am not in default . Thank you

    Reply

    • You should wait to file until you complete your rehabilitation program and make your first payment on your loan with your new lender under your new repayment program. Otherwise, you’re going to see your tax return offset like all of the commenters above.

      Reply

  92. My wife doesn’t work (no taxable income) and hasn’t worked for years, we got married last year. we filed jointly this year. Can my refund be taken for the debt she made before we got married, like child support?

    Reply

    • Yes, but there is a form you can file called “Injured Spouse Relief” and have your portion of the return protected.

      Reply

  93. Never received any notification about loan was in collections or offset. Called offset number ssn didn’t have any debts or anything. So I’m lost on how they were able to take my refund.

    Reply

  94. So I just found out that my taxes were taken because of student loans. I did not receive a letter, email or phone call about this. Is there any action I can take because I was not made aware of my loans being in default before doing my taxes? Mind you I have already talked to DOE and they just ignored me saying how I never received a letter warning me of this.

    Reply

    • No, if you’re in default on your loans, you’re subject to having all government payments offset. They don’t need to make you aware, as you were in default and it’s your responsibility to know the status of your debt.

      Reply

  95. I applied for borrowers defense 2/12/19 my claim went under review 02/13/19. I spoke with myeddebt.edu 2/14 and I was told that stopped collections was placed on my defauleted account immediately as of 02/14/19, not to worry if my taxes were taken, that I would get them back just would take about 45 days to request a refund, but most likley because of the stopped collection I wouldn’t be offset because my stopped collections effictive 02/13/2019 or what ever date the myeddebt.edu received the update from borrowers defense. I was told 3 times I would recieve a refund do to the borrowers defense claim and all collections have stopped and that my account was inactive.

    I spoke with TOP 02/21/19 they said they had a debt for school loans that may be offset, but the refund hadent posted yet… and that they were waiting for there system to update. I call friday night because I am a weekly update and it says my whole $5680 tax refund was offset for school loans. and that next 2/27 was my deposit date.
    … My question to you is,

    1. Is this true?

    2. Can that offset be reversed due to stop collection before deposit date?

    3. Have you ever heard of borrowers denfese claims receieving offset refunds back with defaulted school loans?

    4. And if so how long will it really take for me to get my refund back?

    Reply

    • Did you file your tax return before you filed your borrower defense claim?

      1. Is this true?
      – Yes, it’s probably true but we don’t know, we’re not you or the BFS

      2. Can that offset be reversed due to stop collection before deposit date?
      – It can be if you’re out of default and the Department of Education removes the collection before your payment is disbursed. You’re running a high risk – these organizations move slow…

      3. Have you ever heard of borrowers defense claims receiving offset refunds back with defaulted school loans?
      – Never have seen it

      4. And if so how long will it really take for me to get my refund back?
      – I’ve never seen an offset refund given back. I highly doubt you will.

      Reply

      • No I didnt file before I my taxes. The process for me went very quick honestly with in 3 day of filing my application it was put in review with stopped collection almost immediately..

        I actually just spoke with the team member, she stated that due to my account being inactive / suspended as of the 15th before my refund was credited to my student loans my entire tax refund will be refunded to me my refund. Once offset post to my account they will request refund which will take about 45 days… Then 3 to 4 weeks after that to receive refund.

        Reply

          • I was wondering how you know so much about the student loan process? Do you work for to know so much information? the DOE, IRS are you a lawyer, student, or ?????
            Please reiterate for us…

          • Check out my about page! I’ve been helping individuals and writing about student loan debt for almost a decade.

            If you have success, you’ll be in a rare place. I’m asking you to come back and share because that would be a great win.

            I do sense a bit of sarcasm in your reply, so I’d also caution you that you’re getting my free opinion and resources here. It’s the internet, and we have no relationship nor ever will.

        • Hi Tiffany, your situation is the exact as mine. I found out on February 21 that my taxes were being offset for student loans from 16 years ago. I immediately filed for forebearence and stop collection 3 days later. How did you find out it was accepted right away? What should my next steps be to find out information like you did?

          Reply

  96. I had part of my taxes offset I was not sent a letter I made arrangements to start a payment plan next week my taxes have not yet been released will they stop my whole refund take out the offset amount and then send it at a latter date to my bank account? Also will the us education department get offsetting my taxes while I’m on a payment plan and making my payments on time?

    Reply

    • Read the article and the comments above. Until you get out of default by completing rehabilitation, you’re going to see your tax return offset.

      Reply

  97. I am 4 payments/months into a rehabilitation program (5 to go). When I file my federal income tax return, I expect to receive a refund. I should wait to submit my federal return until I’ve fully completed the rehabilitation program, correct? And if so, how do I know exactly when I can file my return? That is, they view the student loan as out of default and won’t take my return. My last rehab payment will be in August. Who/where do I check/verify it’s safe to file my fed return?

    Reply

    • Yes, that’s our opinion – you should wait until you complete rehabilitation and make your first payment under your new Federal repayment plan. You’re safe when you’re student loan is no longer in default status – which you can also check on the NSLDS or your credit report.

      Reply

  98. i called the offset number and it said i didnt have a offset when i choose option 1 and then i press option 2 and they said i had a student loan offset but they may or may not take them and i check my status for refund deposit on santa monica and republic bank and they dont have any records of my deposit so does that mean they took my refund already and keep in mind im making payments and im caught up in good standing but when you check the dep of education they say im still at default how is that???

    Reply

    • Who are you making payments to? A debt collector or an actual student loan servicer? Are you on a rehabilitation plan?

      Reply

  99. I tried to track my return and it said that it was taken due to a past debt and i was given a number to contact the bureau of fiscal services. i called the number and entered my information and it says at this time there are no debts associated with my social security number. Is there still a chance i can get my refund?

    Reply

    • If it’s already been taken, you’ll receive a letter in the mail stating why and options to dispute if you believe it to be incorrect.

      Reply

  100. Looked up the status of my return and it says it was offset. I called the BFS number and it says i have no debts linked to my social security number. So am i getting my refund or not? And if not, any clue as to where it’s going or what i can do to find out why it is in offset?

    Reply

    • If your return is offset, they’ll send you a letter explaining it, and options to dispute if you believe it to be incorrect. If you are in default (which you would know), then it’s probably valid.

      Reply

  102. My refund from 2017 last year was taken due to the offset program. Can I use the amount that was taken as a deductible for my 2018 taxes. Been calling all the numbers that are provided but nothing that can answer my question.

    Reply

  103. My entire taxes were taken because of my student loans that i am
    NOT in default! What do i do now? I am so upset.

    Reply

  104. I had a student loan that went into default.My 1st two years of filling they took the whole thing both times. Then afterwards i received my return as normal for 3 years straight. This year i was garnished again. How is that possible?

    Reply

    • The Department of Education has been changing debt collectors over the last few years, and your loans could have been part of the changes.

      Did you ever remember seeing things about your loans being transferred or returned to the Department of Education?

      Reply

  105. If they have questions taken your taxes for a default but you know that your income would’ve made the payments $0 a month right now, is it possible to still get your refund sent back to you?

    Reply

    • No. And if you know your income driven payments would be $0, why not get on that plan and out of default ASAP?

      Reply

  106. My daughter’s federal tax refund this year will be greater than the amount that she has to repay the IRS. Will she still receive a refund for the remaining amount or will they take all of her refund and then send her the overage?

    Reply

  107. I have had my refund taken for the past 3-4 years. Does the money they take go towards any of the interest or principle of the default student loan? If the account is with an agency where do I go to find this out? The agency or the DOE?

    Reply

    • It goes to collection costs, fees, accrued interest, then any remaining amount goes to your loan balance. But, if you’re in default, you’re loan then goes another 12 months of interest and fees, so when you get your next tax return garnished, you’re probably in a worse spot than before.

      So, unless you had a tiny balance, you likely are seeing your loan grow and grow even with the tax offsets. You need to get out of default ASAP: https://thecollegeinvestor.com/22174/student-loan-default/

      Reply

  108. My taxes was taken and I didn’t even know I was in default. I had to search to find out who these people are that took my taxes. The only people that I knew of was navient and it’s not them, that took my taxes. I’m didn’t receive a letter, no phone call, nothing! What can I do about this? I want to fight this, if I would have received a notices, I would have handle the situation properly.

    Reply

  109. I had no federal offsets in place, I called prior to filing, the day before I was supposed to receive the refund, and even now, 10 days after them sending my refund to US Dept of Education, there are still no offsets in place, but yet it was taken. I was in-between a bankruptcy and prior to that, I was in a rehab program. Can they still take my refund even if I have no offsets in place?

    Reply

    • If you were in default, they can 100% take your refund.

      Bankruptcy doesn’t discharge your student loans in 99.999% of cases. If you were in a rehab program but then stopped, then you probably are back in default.

      Reply

  110. so I had my entire taxes offset for student loans but at the moment I was waiting for those taxes because I lost my job and I’m currently behind all my bills.. I called and they gave me a number where I can try and tell them of my situation but they won’t answer and I’m desperate to at least get some of that refund back…

    Reply

    • Sadly, if you don’t have a qualifying reason to get your offset back, you won’t get it. If you take action on your loans, your monthly payment could be as low as $0.

      Reply

  111. I rehabilitated part of my loans last year and recently had all of my loans consolidated. None of my loans are currently in default. I previously had one offset for a defaulted student loan. After this loan was consolidated and came out of default, the servicer advised they lifted the offset and sent a letter to the TOP to update the offset. However, when I call the hotline, the offset is still on there. Should I wait to file taxes until the TOP hotline is updated? How long does it take for the TOP to update? When I talk to the servicer that put the offset on, they keep saying i don’t have an offset but if my refund gets sent to them then they will forward it to me. I honestly don’t trust that information and want to make sure it’s safe to file. Your support is greatly appreciated.

    Reply

    • How long ago was this? I would wait until it’s clear, unless it’s been a significant amount of time.

      Given the backlog due to government funding and the shutdown, I wouldn’t be surprised if it took 60 days or so to clear it.

      Reply

      • The consolidation was complete in January and the servicer confirmed they lifted the offset around the 15th of January. It hasn’t quite been 60 days yet, but it’s updated on my credit. I was getting concerned there might be an issue with the offset being lifted, but I will give it some more time. Thank you for your advice!

        Reply

        • Have you made your first payment under your new repayment plan then? If so, you’re usually safe, but since you also don’t have to file your taxes for another month, I’d wait.

          Reply

          • The consolidation company applied a forbearance on my account so my first payment isn’t due until April. Would it help if I went ahead and made a payment?

          • I would just wait – your tax return isn’t even due until April anyway.

  112. My student loans are in default but I started a loan rehab back in April of 2018. I’m went back to school in August 2018 paying out of pocket because I cant get finaid until my loan is out of default. Can my refund still be offset for the amount I’m paying for school?

    Reply

    • Yes, it can be offset until you complete the rehabilitation agreement. You started that in April 2018 and they usually last 9 months, so are you done yet?

      Reply

  113. Does the balance decrease with every tax return they take? My tax return has been taken for the past 7 years.

    Reply

    • Rarely. What usually happens is you refund goes to accrued interest and fees. But, then you’re not making payments all year – so the balance and fees continue to grow. So by the time you’re seeing your next tax refund taken, you’re in a worse spot than before. And it will only continue to get worse.

      Reply

  114. I received a date of March 13, 2019 to get my taxes back but then found out that they will be offset. Do I have time to contact the department of education to stop the offset?

    Reply

    • No, anything you do to stop your offset will only start now and hopefully you complete the process before next year’s taxes are due.

      Reply

  115. so my husband owes about 25 thousand in student loans. I know that I will be responsible for this as well and my tax return will be offset. We havent set up payments yet but are about to. Do we have to pay off the entire loan in order to stop the offset? or can I make a certain amount of payments and stop the offset? I earned most of the tax money myself, and my husband stays home with the children. Is there any way they could give me back my portion on the refund? any advice?

    Reply

  116. Last year my tax refund was taken due to defaulting in student loans. I just found out that my return was approved today. I called the offset number to see if it would be taken but it didn’t list anything that will garnish my return. Does that mean I’m in the clear of getting my tax return??

    Reply

    • Did you get your loans out of default last year? If not, then yes – you’re probably going to see your return offset this year as well.

      Reply

  117. Hi so I started a loan rehabilitation program about 4 months ago but I started a loan consolidation with NLDS (I believe) for the income driven repayment program or one of those that’s like $0 a month. I haven’t started paying on the consolidation yet because it takes them a while to consolidate the loans. So even though Im still in the rehabilitation program and consolidating my loans, after I make my 1st payment on the loan consolidation I should be ok to file my taxes? Or can I not do both at the same time(rehabilitation and consolidation)

    Reply

    • You shouldn’t do both at the same time. Why are you rehabilitating and then consolidating?

      For taxes, you need to ensure whatever process you pursue is completed.

      Reply

      • Because my student loans are in default. I would like to do whichever one would make it so I can file my taxes sooner. Should I just consolidate?

        Reply

      • I have a tax offset. I researched what to do. The 1st thing that I kept reading about was doing the rehabilitation for 9 months. But then I heard of loan consolidation and that doesn’t take as long. I would like to do whichever one would help me to file my taxes sooner. Which one should I do?

        Reply

          • But if I want to file my taxes sooner, I should do a loan consolidation instead of rehabilitation? Since rehabilitation takes 9 months and consolidation takes them about a month I was told to get everything together. I understand my credit is important. But right now my family needs this tax money badly.

          • I entered into a lump sum settlement with Lender. I still have 60 days left but they took my tax returns.

            1. Can I contest since I entered the lump sum agreement?

            2. Will the amount go towards Lump Sum Settlement?

            3. If no, Can I get a refund of my tax returns if i make the lump sum payment?

          • 1. No, only if the agreement was completed could you fight the offset

            2. I don’t know – that’s between you and the collection agency that you setup the agreement with. I would argue with them that you should get that amount taken off.

            3. No.

          • But doing the consolidation would go faster and I’d be able to file my taxes faster then waiting the 6 more months for the rehabilitation?

          • Consolidation will be faster – it will take about 2 months. But it also will damage your credit for the long run. So, your refund today is say $2,000, but due to your poor credit, things will cost you more than that over the next few years.

  118. My husband and I filed our taxes last year as married filing jointly. Our entire refund was taken for my defaulted student loan …. I am currently working on setting up a payment plan with them to get my loan out of default …. It is time to file taxes again. I have very little to no income not even enough to receive a 1099 . So if my husband and I filed separately would that stop them from taking his tax refund this year ? I have already been told my return would be taken again this year …. Thanks !

    Reply

    • Yes, he can also file for injured spouse as well.

      It sounds like you’re close to setting up your payment plan, so you can also wait to file until that is complete.

      Reply

  119. My income taxes were taken for an offset, but I was told by the company that has my loan the ask for a hardship. How do I go about doing that? I’m in a repayment agreement with the loan company already. Is there a form online or a number to call? They told me to call the department of education but they are so busy it disconnects you. Thanks for any help.

    Reply

  120. I did consolidation My student loan says default i made my tgree payments waiting for new lender but im out of offset can i file my taxes

    Reply

  121. Hi-
    I just entered a payoff agreement with a collection agency and have 90-days to pay off the loan. Taxes are due in the meantime and i received an offset notice in the fall. Will they still take my taxes? Thank you for the advice.

    Reply

    • Yes, if you’re getting a refund, wait until after you payoff the debt and the offset is removed!

      Reply

  122. Hi, I have a loan rehabilitation and recently March 21,2019 I made a repayment, In my credit report doesn’t have anymore the student loan default and either when I call the offset number… My taxes were taken on February 27,2019 and when I call DOE what it says ( no debt) Do you think I can get my taxes refund back?

    Reply

  123. Thank you for all the information. My loan is 19 years old, and refund was taken. Is there a number I can call to find out if I owe more money or if my refund took care of the full amount owed? I do not know the holder of my loan. Thank you.

    Reply

  124. What if I just revived the letter in January from the Department of Education and returned everything they wanted, found out in March what the payments were going to be along with my due date in April. How can they take taxes if I just got back all of the information I needed to complete a payment?
    No where on the letters does it state that I need to send a payment in within the 60 day time frame that they are now stating that I did not comply with.

    Reply

    • You’ve also been in default way longer than when this letter arrived. Just being in default gives the government the ability to garnish your tax return. You also don’t have to file your taxes right now, you can wait until you sort it all out with the Department of Education.

      Reply

  125. I am in repayment with pioneer (Navient/Ascendium) and was told they weren’t suppose to take. I’ve been approved for it to be returned but been waiting since Feb 22/ March 18/ March 22. I was told I’m waiting for Dept of education to approve and say “cut check” I feel like I’m being thrown around. I just want my 6400.00. She claims it was due to gov shutdown but sheesh..they shutting me down at this point. I’ve been on hold for over an hour waiting for someone to give me and my family A REAL DATE THEYRE RETURNING MY MONEY!!!

    Reply

    • If they took the refund and you’re getting it returned, it usually takes about 9 weeks. It’s a long time…

      Reply

  126. Who do I contact to expedite? I was told they cut checks every Friday but nobody seems to know who has authority but they were quick to intercept? Naivent said they’re waiting on ascendium and ascendium said they’re waiting on navient.i called dept of ed they claim it should have been returned since Guarantor returned it

    Reply

    • And it will be returned. It just takes about 9 weeks sadly. There isn’t anyone to call to expedite.

      Reply

  127. So my fiance stays home with our son and does not work but his student loans are in default, will my refund be garnished if I put him down as a dependent?

    Reply

  128. So my situation is last year I had my taxes taken for student loans so I applied for the income-based payment plan I had $5 taken out of my account every month yet this year my taxes were taken again. Apparently I did not provide all the information needed to qualify for the income-based program yet they continue to take $5 from my account and refused to refund me the $5 or the tax refund. My question is if I am making payments how is it legal for them to also take my tax return. If I did not qualify for the program money should not have been taken out? Right!??

    Reply

    • Until you complete loan rehabilitation and get on a real income-based repayment plan, you’re technically in default. As long as you’re in default, they can take your refund.

      Reply

  129. So the irs took my tax refund this year for my student loan debt. What can I do so they won’t take it again, or is it just bedt to let them take it to pay down the debt?

    Reply

  130. I have been in a contract for repayment of my student loan for several months.Its not the rehab, it’s repayment but my tax return was just taken by the doe.I thought they couldn’t take it since Im in a repayment contract and have made several payments on time.

    Reply

    • You need to complete your rehabilitation agreement before you’re considered out of default.

      Reply

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