The Government Has Started Taking Tax Refunds Again–Take Steps Now to Avoid Collection!
On May 5, 2025, the federal government restarted collections on federal student loans that are in default. That means if you haven’t made a payment on your federal student loans in more than 270 days, you could soon face serious consequences, including losing your tax refunds, a portion of your wages, and even some of your Social Security benefits. Unlike other types of debt collection, the government can take these steps without going to court. There is no statute of limitations on collecting federal student loan debts. This means you could face collection actions for debts that are years old.
Take steps now to make sure your loans aren’t in default! If you are in default, act quickly to get out of default and avoid collections.
Tax refund offsets are one of the government’s powerful tools to collect defaulted federal student loans. The government may take your federal income tax refund if you are in default. Computer records of all borrowers in default are sent to the IRS. If you are in default on your federal student loans, all or a portion of your tax refund may be taken and applied automatically to your federal student loan debt.
You should get a letter before your taxes are taken the first time, letting you know that your refund is being offset and giving you information about requesting a hearing to stop the tax refund offset. If your tax refunds have been taken in the past, you may not get a new letter to let you know about taking future refunds. If you want to see if you are on the list to have your refund taken, call the Treasury Offset Program at 1-800-304-3107.
Make sure your contact information is updated with the Department of Education and your loan servicer. Many people who don’t get notice that their tax refunds have been taken have moved and failed to let the government know their new address. Don’t miss out on important updates. Call your loan servicer or log in to your studentaid.gov account to update your contact information.
Can I stop the government from taking my tax refund?
If you get a letter from the federal government letting you know that your tax refunds are being taken to pay back your student loan debt, don’t ignore it. First, make sure that the letter is not a scam. There are a lot of scammers pretending to be the government. Before you call any numbers on any letter you receive, make sure to do a quick internet search to verify that the number you are calling is actually the federal government. Once you have confirmed it is not a scam, you can take steps to try to stop the tax refund offset by requesting a review.
The process for challenging tax refund offsets may be changing. There may be changes coming to the way the government collects student loan debts. Because of these changes, the steps you have to take to try to stop the government from taking your tax refunds may change as well. We will update this page as we get more information, but you can check for further updates on studentaid.gov.
For instructions on how to submit a signed written request for a review, you may contact the Department of Education Default Resolution Group. You can call the Default Resolution Group at 1-800-621-3115. You can find more information and set up an account with the Default Resolution Group to manage your requests online at myeddebt.ed.gov.
What will the government consider when reviewing my request to stop the tax refund offset?
The government will typically consider whether you have any defenses to repaying your student loan debt.
Some of the main defenses include:
- you already repaid the loan,
- it is not your loan or there is some other reason why you do not owe the money,
- you have already entered into a repayment agreement with the loan holder and are making payments as required,
- you have filed for bankruptcy and the case is still open or the loan was discharged in bankruptcy,
- your school lied to you about the program or the loans you were taking out,
- the school failed to pay you a refund after you withdrew from classes,
- you are totally and permanently disabled,
- the loan is not enforceable, for example because of forgery or other reason, or
- you are eligible for a closed school discharge.
Can I have my tax refund offset stopped because I am experiencing a financial hardship?
In some cases, the government will stop a tax refund offset due to your financial hardship, but you usually have to be facing a significant and urgent hardship, such as an eviction, foreclosure, or utility shut-off, in order to stop the offset because of a hardship.
For more information on the collection of federal student loan debt, visit the Federal Student Aid website page on collections.
