Unpaid student loans and the Treasury Offset Program

If you don’t pay certain debts that are guaranteed by the federal government, like student loans, the government will seize your tax refunds and even a portion of your Social Security benefits to cover the unpaid balance(s). Keep in mind that refunds can include earned income tax credits and child tax credits intended to help your family, and you will lose those benefits. This is done under the Treasury Offset Program; a centralized offset program to collect delinquent debts owed to federal agencies and states. 


In addition to taking your tax refunds, the government can also take up to 15% of your Social Security benefits but they have to leave you with at least $750 a month. If your income supports the ability to repay your student loan debt but you refuse to pay, or avoid their attempts at contacting you, they can sue you. If you keep thumbing your nose at them they might even arrest you – it happens. 


If you receive mailings do not procrastinate; open them. If you owe delinquent student loans the best thing you can do is to contact your lender and make arrangements for payments that you can afford. If your Social Security benefits are being garnished you have rights before the Department of Education to negotiate affordable repayment options.