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Will the IRS Take My Refund for Student Loans?


will the irs take my refund for student loans

When it comes to unpaid federal student loans, the federal government has a couple of powerful methods they can use to compel payment: wage garnishment and seizing your tax refund. As effective as these methods are, they can only be used in specific situations. Here, we’ll answer the question “will the IRS take my refund for student loans?” and some of the recourse options that may be available to you.

When Can the IRS Take Your Refund for Federal Student Loans?

Once your federal student loans have been delinquent for a specific amount of time, typically 270 days, you enter default territory. When you’re in default, the Department of Education submits your information to the Department of Treasury to request an offset, at which point you’ll also receive a notification letter. The amount of the tax offset depends on how much you owe and can be your entire refund, as well as your spouse’s refund if you file jointly. Learn more about the tax offset process here

How to Prevent the IRS From Taking Your Refund

If you’ve entered default on your federal student loans, there are steps you can take to avoid the IRS taking your refund. You can reach out to your lender and consolidate your loans using one of the programs available, like Pay As You Earn (PAYE), or you can negotiate a new payment with your current lender through rehabilitation. It’s important to act quickly to keep the IRS from taking your tax refund.

If you’ve received an offset notice, you may still have time to file an appeal. While rare, there are reasons that can result in a successful appeal, including school closure, so it’s important to know your options.

What to Do When Your Refund Has Already Been Offset

If the IRS is already taking your refund for unpaid student loans, the offset will continue until the loan is repaid, which can be done through consolidation. Lastly, there are some circumstances in which you can file a financial hardship appeal to attempt to get some of your refund back.

How We May Be Able to Help

If you’re delinquent, in default or currently having your tax refund offset, there are options available and we may be able to help. You can visit our site to learn more about services or call us at (215) 307-3939 today.


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