Section 435(i) of the federal Higher Education Act allows the Department of Education to collect delinquent debts through the federal tax offset program. The Financial Management Service of the U.S. Department of the Treasury administers the Treasury Offset Program. The Treasury Offset Program allows the Department of Education to recover their delinquent debts from taxpayers, including Federal Student Aid loans. The Financial Management Service may only offset federal student loan delinquencies -- not private. Taxpayers can contact the Financial Management Service with further questions and to check on any offsets. They may also contact the Department of Education.
Check your Notice of Offset. Although federal law limits tax offsets to federal obligations and loans that are delinquent for at least 90 days, student loans must be delinquent for at least 270 days if they are payable on a monthly basis or 330 days for loans payable at less frequent intervals.
Review your Notice of Offset for the amount of your tax refund subject to the offset. Under federal law, the Department of Education must give you at least one notice of the offset and an opportunity to settle your default before the Financial Management Service can proceed with offsetting your tax refund.
Contact the Treasury Offset Program Call Center toll-free at 888-826-3127. There is no statute of limitations for the federal government to pursue collections against delinquent student loan payees, according to the Higher Education Act, including federal tax offsets. Thus, the Department of Education can offset delinquent student loans for an unlimited time.
Review the offset amount. If you believe you completely repaid your loan or are not delinquent in your loan payments, contact the Call Center and provide proof of payment. Proof of payment includes receipts and copies of processed checks.
File an Internal Revenue Service Form 8379, Injured Spouse Allocation, if necessary. You may file a request for a return of any offset if your joint refund was subject to a student loan offset. by filing the injured spouse request.
You can apply for a hardship exception for a refund of the offset in writing, and the federal government requires proof of inability to pay.
The information in this article should be used for general guidance. Because of the fact-sensitive nature of legal claims, seek the advice of a licensed attorney in your state or contact your state's bar association for information on pro bono legal assistance.