There are many reasons for why a person to default on a student loan. Sometimes a person cannot afford to keep up on payments, is not making enough money, or maybe there are other bills that need to be paid first. Regardless of the reason, if you have not been making consistent payments or have stopped paying back your loan entirely, you can go into default.

What you may not know is that defaulting on a student loan, like any loan, can result in garnished wages. This means that the Department of Education can take money out of your paycheck to keep payments going. It can also work directly with the IRS to ensure that any refunds due to you go towards the repayment of your defaulted loan, which is known as a “tax refund offset.”

If you have already had your tax refund garnished and it has resulted in any financial hardship, you may be able to get that money back.

Ways to qualify for student loan tax offset hardship refund 

You can request this whether your tax refund has been taken or not. Time is of the essence, so you may want to move quickly with the request. Be advised that there are limitations to this, such as living expenses, income, and medical bills do not qualify. The following are examples of situations that qualify:

  • You have an open bankruptcy case or your student loan was previously discharged in bankruptcy
  • You have already repaid the loan
  • A loan in someone else’s name shows under your name due to an incorrect Social Security number
  • You are already paying back the loan based on a repayment agreement with the Department of Education
  • You are completely and permanently disabled
  • The loan is not enforceable

If any of these situations describe you and your situation, you will need to complete a form for a student loan tax offset hardship refund form and provide proof of your hardship. You can also find out more information by contacting the Treasury Offset Program or an attorney who understands student loan law.