Editor's Note: No! The Department of Education paused collections as of January 16, 2026. Here's what to know about paused collections.
Student loans are back in repayment, and starting in 2026, that also means that collection activity has resumed on student loan debt. Could your student loans cause you to see your tax refund garnished?
According to data from the Department of Education, around seven million borrowers have defaulted on their student loans. Those who are in default could risk having their tax refund seized come tax time.
You might be planning on getting a tax refund in 2026 but if you’re in default on your federal student loans, your refund could be at risk. Here’s what you need to know about how tax refund garnishments work and how to stay out of default to avoid losing your refund.
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Will Student Loans Take My Refund in 2026?
During the pandemic, the government froze student loan payments. It also paused collections on past payments due from accounts that were in default. Now that student loans are back in repayment, your tax refund could be seized if you’re behind on your student loans.
Your account is considered in default if you haven’t made a payment on your federal student loans in 270 days. When that happens the Department of Education can garnish your tax refund to offset missed payments.
This means that you could face garnishments beginning in 2026 on both your federal and state tax refunds.
Tax garnishments only apply to federal student loans. If you have private student loans that are in default, your tax refund won’t be seized but your debt could be sent to collections and your credit score will likely take a hit.
If your private lender does sue you, they could win a judgement against you and attempt to collect your tax refund that way.
Related: Why Strategic Default On Your Student Loans Is A Bad Idea
What Is Student Loan Refund Tax Offset or Garnishment?
A student loan refund tax garnishment is technically called a tax refund offset. This can happen when you’ve defaulted on your student loans but are owed a tax refund. Instead of receiving your refund, it will be garnished to offset delinquent student loan payments.
If you find yourself in a situation where your tax refund could get garnished, you should receive a notice in the mail from the Treasury Offset Program’s Bureau of the Fiscal Service – rather than the IRS. This notice should come 65 days before your refund is going to be seized. However, receiving this notice may not happen if your address or other personal information is incorrect or outdated.
The notice will have information about how to contest the garnishment if you think there’s an error. Borrowers can contest a tax refund offset for a number of reasons including:
- Fraud and identity theft
- Bankruptcy
- Disability Discharge
- The debt has already been paid
You may be required to provide payment records or court documents to contest an offset.
Garnishment isn’t limited to the current tax year. If a tax offset is initiated, future refunds could also be seized.
Depending on your situation, you may qualify for a student loan offset hardship refund. Acute instances of economic hardship include using your refund to cover rent to avoid eviction or using your refund to avoid utilities from being disconnected.
Borrowers that qualify for an economic hardship may be able to recover some or all their garnished tax refund. For example, if you demonstrate you have a $2,000 hardship and your refund is $5,000, you’ll receive $2,000 to cover your hardship expenses while the remainder of your refund will be garnished.
Contact the Treasury Offset Program to obtain the appropriate forms to apply for a hardship refund.
What to Do to Avoid Defaulting on Your Student Loans
The best way to prevent student loans from taking your tax refund is to avoid defaulting on your student loans. To avoid default you can:
- Enroll in an income-driven repayment plan
- Attempt to rehabilitate your loans if you haven't previously
- Request deferment or forbearance to pause payments
- Consolidate your loans into one payment
- Refinance your loans to lower the monthly rate
- Pay off your loans in full (if possible)
Borrowers who are already in default and missed the Fresh Start deadline can enter into student loan rehabilitation. Rehabilitation allows borrowers to return to good standing after nine on-time payments during a 10-month period. If you can make at least five of those payments, you can avoid a tax refund garnishment.
Defaulting on your student loans can adversely affect your credit. When a default is reported to the credit bureaus, it can follow you for years and affect your ability to buy a car or get a mortgage. Successful completion of a rehabilitation agreement can eliminate the default from your credit report.
What Happens if I Owe Student Loans but Am Not in Default?
Owing money on your student loans doesn’t mean you’re automatically in default. The government considers you to be in default if you miss payments for 270 days.
While defaulting on your student loans can initiate a tax refund offset, so can missing a child support payment, failing to pay your taxes, or defaulting on a Small Business Administration Loan.
Your tax refund won’t be at risk if you’re current on your student loan payments. Stay on top of your payments to avoid the risk of going into default and potentially losing your tax refund.
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FAQs
When will student loan tax refund garnishments begin again?
Garnishments resume when federal collections restart following policy pauses or relief measures.
How can I avoid having my tax refund garnished due to federal student loan default?
Resolving default through rehabilitation, consolidation, or repayment plans can prevent garnishment.
Do private student loans also lead to tax refund garnishment if I default?
Private loans do not trigger federal tax refund offsets but may pursue collections through legal action.
What is a student loan tax refund offset, and how will I be notified if it happens?
An offset applies refunds to defaulted debt, and borrowers are notified in advance through official correspondence.
Editor: Colin Graves Reviewed by: Robert Farrington
Amanda is a financial writer and researcher who covers financial aid, investing, cryptocurrency, and economic trends. Drawing on years of analysis across markets and technology, she helps readers understand how innovation and policy shape personal finance decisions.
A summa cum laude graduate of Syracuse University, Amanda brings an international perspective informed by experience in Washington, D.C., the Middle East, and the private sector. Her work reflects a commitment to accuracy, transparency, and practical insight—core values that guide The College Investor’s mission to make finance accessible to everyone.