Federal government may seize tax refunds to collect defaulted student loans

Millions of people who have defaulted on federal student loans face the prospect of having their income tax refunds seized this year as the federal government resumes offset collections; the 2026 income tax filing season opens on Jan. 26. About almost 10 million borrowers are in default, and many more seizures are expected this tax season, the report said.

The Education Department can ask the Treasury Department, which oversees the IRS, to intercept tax refunds to repay loans in default. Federal loans are generally considered in default after nine months of missed payments, and there is no time limit on the government’s authority to collect.

Collections restarted on May 5 after a pause that began in March 2020; because collections resumed late in last year’s filing season, relatively few refunds were seized in 2025, the article said. The Education and Treasury departments did not respond to requests for comment. Borrowers can call the Treasury Offset Program hotline at 800-304-3107 to check whether they are on the offset list; “Dial before you file,” Persis Yu of Protect Borrowers said in the story.

If you are on the list and expect a refund, options before filing include submitting Form 4868 to extend the filing deadline to Oct. 15 and taking steps to get loans out of default through rehabilitation (nine on-time monthly payments) or consolidation (usually four to six weeks).

Key Topics

Politics, Defaulted Student Loans, Treasury Offset Program, Treasury Department, Education Department, Tax Refunds