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Like most people, graduation may be the most memorable occasion in your life. You studied hard to keep up your grades; you sacrificed your time to complete your course work; and you may even have had to go through the process of availing your student loan to cover all your course fees. All this effort culminates in achieving a college degree on graduation day!

However, the warm feeling of finally earning a degree wears off quickly once you find yourself surrounded by huge pile of student debt. Most loan repayment plans commence about six months after graduation. But finding a job with a salary high enough to pay the loan installment amount due is not an easy task. It takes most graduates quite some time to secure a decent paying job. Unfortunately, all too often the defaulted loan ends up on the desk of a debt collection agency.

Some Student Loans Become Certified for Tax Refund Offset

In the U.S., the Department of Education (DOE) refers all defaulted student loan debt claims to the Department of Treasury. The treasury department can request the IRS to offset the loan amount against federal and/or state tax refunds. Tax refund offset means that your state or federal tax refunds would be used to make payments of the student loan amount that is due.

Once the DOE requests the treasury department to collect student loan due from the delinquent borrower, the defaulted student loan becomes certified for tax refund offset. The certified status remains as long as the student loan amount remains due from the borrower or it is legally discharged in the event of bankruptcy.

The certified status of the student loan cannot be made void by making voluntary payments in lieu of the loan installment amount. You may offset the certified student loan tax offset status through payment of the loan amount in full, consolidation, rehabilitation, or settlement for partial payment or cancellation of the loan amount. In other words, the delinquent borrower would have to bring the student loan due back to the current status if he or she would like to remove it from the certified tax refund status.

How Can I Check If My Student Loan Amount Is Certified For Tax Refund Offsets?

Under the current U.S. laws, you would receive a tax refund offset notice from the IRS at the specified mail address. You can then file a request with the Department of Education to review your tax refund status. However, in case you have not updated your current address with the IRS, you may not receive the notice of the student loan tax refund offset.

You can check the status of your federal student loan payable by contacting the Department of Education directly. The DOE will refer you to the assigned debt collection agency that currently holds your debt. You can also contact the Treasury Offset Program (TOP) call center to know whether you student loan amount is certified for tax refund offset.

Department of Education’s customer service number: (800) 621-3115
Treasury Department’s designated offset call center: (800) 304-3107

You can also contact a private student loan consolidation company to discuss various student loan repayment options.