Are Your Tax Refunds Collected To Pay Off Late Student Debt? Biden Administration Pauses Refund Seizures
With tax season officially underway, student debt holders who are among those filing orders may have mixed feelings if their hard-earned tax returns will just go towards chipping away at their mountainous pile of student loans. If you are counting yourself in this category of wary filers, you are in luck this year, however.
On Tuesday, the U.S Department of Education announced that it was pausing the seizure of filers’ tax returns to pay off any delinquent student debt. This move will affect about 9 million people who have a federal student loan in default, meaning they’ve fallen at least 270 days behind on payments.
The Education Department does hold the power to collect on delinquent debt via the Treasury Offset Program, which intercepts certain government payments to recover owed funds like student loan debt. This program was frozen during the COVID-19 pandemic much like student loan payments in general.
Federal student loan payments are postponed until May 1 when collections are expected to restart. The Biden administration has come under sustained pressure from progressives within his Democratic Party, who are pushing for him to use his executive authority to forgive students' federal student debt. Biden has deferred to the Education Department to determine whether he had the legal authority to act, but the president himself has been critical to the point of dismissiveness of the idea.
As tax season approached, there was concern among a number of followers who feared the government would redirect repayments, such as the child tax credit, to pay off delinquent debt. However, last week the department said that it would not be seizing these payments for that purpose.
"[The Education Department] will make sure families who have student loans in default do NOT see [child tax credit] benefits garnished – even for refunds issued after the payment pause ends," Education Secretary Miguel Cardona wrote on Twitter on Feb. 8.
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