Education Department suspends seizure of tax refunds, Social Security for overdue student loans until November

cnbc.com:

The U.S. Department of Education has suspended the seizure of tax refunds, Social Security and other government payments to satisfy defaulted student loans until November, the agency said.

About 9 million people have a federal student loan in default, meaning they've fallen at least 270 days behind on payments.

The Education Department — as well as other federal and state agencies — can collect on delinquent debt via the Treasury Offset Program, which intercepts certain payments to recover the owed funds.

Borrowers have gotten a reprieve during the Covid-19 pandemic due to a federal pause on loan payments, interest and collection.

But that policy ends after May 1 — fueling concern among consumer advocates that the government would seize tax refunds issued after that date, including benefits like the earned income, child and Recovery Rebate tax credits aimed at low-income households.

However, the Education Department will not restart collection via the Treasury Offset Program for six months after the Covid-19 payment pause ends, according to its Federal Student Aid website. That would be after Nov. 1, if the pause isn't extended again.

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It appears the Department updated its policy last week, though the precise timing is unclear. An agency spokesman didn't return a request for comment.

«This policy means you won't lose money from certain government payments, such as the child tax credit, Social Security payments, and tax refunds for the 2022 tax season,» according to the agency website.

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