What Can You Do If Your Student Loan Amount is certified for Student Loan Tax Refund Offset?

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.


Top 5 Advantages of Consolidating Student Loan Debt

Graduation is no doubt one of the most memorable moments in a person’s life. It signals closing stages of the carefree life that we have become accustomed to and entering a more responsible phase of adulthood. However, graduation day also reminds us of the fact that the grace period for paying off those student loans is about to end after which you have to start making payments to back the loans.

Various financial assistance programs are available for graduates, to assist them with making payments on their student loans. Consolidating student loan debt offers various benefits in financing the loans.

Benefit #1: Streamlined Payment Process
One of the foremost benefits of consolidating student loan debt is that it streamlines your monthly loan payments. How is that possible? Consolidating the loans merges you previous loans into one single amount that you have to pay at a specified period. The lender who consolidates your loans will take care of you previous loans and issue a new loan with better loan terms and conditions. A streamlined payment process makes it easy for you to finance the loan and avoid the prospect of defaulting on payments, which has various repercussions.

Benefit #2: Reduced Interest Rates on Loans
Consolidating the loans usually results in reduced interest rates. Consolidating student loan debt entails a new interest rate that is calculated from the interest rates of previous loans. This normally results in overall reduction in interest payments on loans.

Benefit #3: Tax Benefits and Relief
Another benefit of consolidation loans is that it is tax deductible. This can offer savings in excess of $2,000. (Please refer to IRS Publication 970 chapter four for more details!) This greatly eases the debt burden and prevents defaulting.

Benefit #4: Extension in Repayment Term
Consolidating student loan debt also extends the payment period of loans, ultimately resulting in reduced monthly payments. This extended payment period means that you do not have to fret over any looming deadlines and that you can focus on making payments for the loan amount. This also allows you to save money for such necessities of life like your own home, retirement income, and a car.

Benefit #5: Fixed Interest Rate for the Loan Term
Student loan consolidation fixates interest rates for the duration of the loan. This allows you the luxury of knowing the exact monthly amount you have to pay to pay back your loans. You save yourself from any surprise increases in interest rates that might make financing a loan difficult.

The tasks and paper work required in student loan consolidation can be overwhelming and complex for many people. In order to obtain maximum benefit from consolidating your loans, it is important that you should get professional guidance and advice. Qualify with a service provider and see how you can benefit.


Learn How to Challenge and Avoid Student Loan Tax Refund Offset

If you obtain a notice of tax refund offset for a student loan, you can challenge it on various grounds.

Did you know that defaulting on your student loan could have serious consequences? If you fall into default, you put yourself at risk of having your tax refunds taken away by federal and state authorities.

How Does a Tax Refund Offset Happen?

Computer Records of debtors who have defaulted on their student loans are sent to the IRS. The federal revenue agency takes all or a part of the individual’s tax refunds and applies it to student loan debt. If you file a joint tax return, the IRS may even hold your spouse’s income tax refund.

The Department of Education initiates requests for tax refund for any of the following two reasons:

1.    Student Debt that is due to or guaranteed by the Department of Education
2.    Student Debt that is due to private lenders or guarantors who have contacted Department of Education

The IRS will send you an advance notice of the proposed tax offset, including the amount and nature of the outstanding debt. When you receive the tax offset notice, you can:

•    Request to inspect and copy student loan records within 20 days of receiving the notice,
•    Request to review the proposed tax offset within 65 days of receiving the notice or 15 additional days if you have requested to inspect your loan records

You must appeal directly to the Department of Education, if you want to review the proposed tax offset.

How to Challenge a Tax Refund Offset?

When sending a request for review, you must include your name, social security number, loan amount and a written objection to the debt. You must also specify whether you want to request a hearing in person, online or by telephone. Some of the reasons for which you can object to tax refund offset include:

* Student loan amount is already paid by you
* Student loan is cancelled or discharged in bankruptcy
* Mistake in crediting you with the student loan
* Wrong loan amount is posted in the notice
* Refund of student loan due because of closed school discharge or false certification discharge
* Borrower of the student loan amount is dead or permanently disabled
* Have entered into a written agreement with creditors to pay off the loan amount

How to Avoid Tax Refund Offset?

Generally, it is very difficult to get out of a tax refund offset. You can lessen the chances of tax refund offset by entering into a written agreement with your creditors or guarantors for repayment, consolidation, rehabilitation, or deferment of your student loan debt. Some ways to avoid the student loan tax refund offset include:

a. Repayment of Student Loan Amount

One way to avoid tax refund offsets is to pay the student loan amount in full. You can either pay the loan amount due under the original terms of condition or under a revised repayment plan. The repayment plans range from standard and fixed amount payment plans to income specific and income contingent payment plans.

b. Consolidation of Student Loan Amount

Another option to avoid tax refund offset is to consolidate your student loans. Student loan consolidation merges all your student loans into a single loan. The advantage of consolidating your loans is lower monthly payments in paying off the loans. Most federal student loans are eligible for consolidation. Two of the most popular student loan consolidation program includes:
•    Pay As You Earn (PAYE) and
•    Income Based Repayment Plan (IBR)

PAYE repayment plan is available for all loans availed on are after Oct. 01, 2007. Although it is the most generous loan consolidation plan, not every applicant qualifies for the program. The IBR student loan repayment plan adjusts the monthly loan amount based on what you earn. The payment amount can be as low as zero dollars if the discretionary income is not enough to meet the minimum monthly payment amount.

c. Rehabilitation of Student Loan Amount

Rehabilitation of your student loan is another option that you can consider to avoid student loan tax refund offsets. Under the loan rehabilitation program, you have to make around 9 voluntary payments of an agreed amount over a ten month period. This allows you to get your loan in good standing and avoid tax refund offset. Once the rehabilitation period is complete, you will have to make payments according to original terms and agreement of the student loan.

d. Deferment of Student Loan Amount

Finally, you can apply for deferment of the student loan to avoid tax refund offsets. During the deferment period, you do not have to make any payments on your loan amount. You may be eligible for deferment if you are:

•    Attending a rehabilitation program for disabled individuals
•    Enrolled in a graduate or post graduate fellowship program
•    Facing financial hardship
•    Unemployed and seeking a full time job

To find out more or to avoid tax refund offsets, visit the Student Loan Project and get your free consultation.

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Recognize the Downside Consolidating Student Loan Debt

If you are burdened with federal or private student loans, you may have heard about student loan consolidation programs that can offer relief from your debt. But before you apply for a loan assistance program, it is imperative that you know the cons of consolidating student loan debt. Understanding certain aspects of the student loan consolidation program helps you to gain greater benefits from the student loan program. Knowing the drawbacks of consolidating student loan debt will allow you to get a clear picture of getting optimal refinance terms and conditions suitable for your needs.

Drawback #1: Your Loan Amount May Increase on Consolidation

One of the cons attached with student loan consolidation is that the actual loan amount increases with consolidation. You get relief only in the form of lengthening the duration of the loans thereby paying reduced monthly installments on the loan. The overall loan amount increases as you might have to pay greater interest payment when you consolidate your loans.

However, the good news is that you could end up paying a lower interest rate on the consolidated loans. When you consolidate the loans, a new loan is created with revised terms and conditions. So, with proper research and guidance, you can agree on the “right” loan term and rates from the lenders. In addition, consolidated loans are tax deductible which means that you can save more than $2000 on the process.

Disadvantage #2: Your Loan May Get Locked Up with Fixed Interest Rate

Another drawback of student loan consolidation is that your loan amount may become locked with a fixed interest rate. Consolidation involves taking a weighted average of previous loans and fixes a new interest rate for the duration of the loan. Although this provides protection against rising interest rates in the future, you may not benefit if there is a decrease in interest rate.

However, fixing the interest rate allows you to know exactly how much payment you have to make without any surprises. You can effectively budget your finances with the peace of mind that the monthly loan payment will not increase in the future impacting other vital expenses. Consolidating your federal and private loans provides you with much needed financial relief and assistance. It gives you the flexibility of financing your outstanding loan and making payments for the necessities of life without much difficulty.
Are you qualified for student loan consolidation? Click here to see if you qualify for student debt relief.


Why Consolidate Student Loans Debt?

Student Debt Consolidation – Get Relief from Student Loans

In a nutshell, student debt consolidation is a loan refinancing program that makes it easier for students to make monthly loan payments and avoid default. The process involves a lender paying out previous loans and offering a new loan with softer terms and condition. All the prior loans are merged into a single loan with generally reduced rate of interests.

The rate of interest on a consolidated loan is determined by taking a weighted average of rate of interest on previous loans. This normally results in making reduced interest payments as compared to those paid on individual loans. However, you should be aware that consolidating certain loans results in an increase in the rate of interest. Getting professional advice ensures that the debt consolidation results in relief from the debt burden rather than further exacerbation of the problem.

Debt Consolidation Options –Private Loans and Government Loans

Student loan consolidation is not an easy task. As mentioned, consolidation of certain loans results in an increase in debt burden rather than providing relief from the debt. This is especially the case when consolidating some government loans like Harvard and Stafford loans with private loans. You can lose the benefits attached with these loans on consolidation thereby increasing the debt burden. Therefore, you should try consolidating such government loans separately to avoid losing the benefit attached to these loans.

That is not to say that you should consolidate each and every government loan separately. There are certain cases when consolidating private and state loans provide benefits in terms of significantly reducing monthly loan payment. So, how do you determine the best course of action regarding private and state loans consolidation?

The first choice is to conduct extensive research relating debt consolidation before applying for such loans. Specifically, you should know about the eligibility criteria, consolidation process and options trend reports, latest bills and other aspects of debt consolidation.

And the second choice available for you is to let professional consolidation firms handle the case of debt consolidation for you. These professionals know the nitty gritty of the debt consolidation process. They can provide valuable guidance and advice in preparing for your debt consolidation with a greater possibility of getting the best possible terms and conditions on your consolidated loans.

Successful student debt consolidation requires proper research and guidance. The debt that allowed you to finance your graduation cannot be paid back unless you secure a steady and stable job, which takes time. That is why it is important that you should get help as soon as possible and consolidate your loans to avoid defaulting on them.


How to Avoid Student Loan Consolidation Frauds?

Consolidating your student loans greatly eases your debt burden. Loan consolidation ultimately results in lowering the monthly loan payment thus providing great relief to students. Through this student debt relief program you can easily finance your loans in the form of lower monthly payments. This not only eases your debt repayment burden but also allows you to pay for other necessities of life.

Although there are many of loan consolidation companies not all of them are genuine and legit. The following guidelines will help you in avoiding the prospect of selecting a illegitimate loan consolidation company and avoiding frauds.

Read the Terms and Conditions Carefully

The most important advice to protect yourself from loan consolidation scams is to carefully read the terms and conditions relating to the debt consolidation. You should never sign the loan consolidation contract without reading the terms and conditions prior to the loan consolidation agreement.

Look at Guarantees with Caution

You should look with caution to any guarantees provided by the loan consolidation firm. Some outrageous guarantees include “0% interest rate on consolidation”, “We Pay More Than Your Loan” etc.

Verify Payment of Loans

The best way to protect yourself from loan consolidation frauds is to contact your loan providers to verify the payment of the loan amounts. You should ensure that the debt consolidation firm has paid out all the previous loans to ensure that you are not being swindled by the consolidation firm.

Be Wary of Hidden Fees and Charges

You should be wary of hidden costs and fees when making agreements with a loan consolidation firm. These fees and charges add to the loan burden rather than providing relief from the student loans. Some of the fees and cost that you should be wary of on consolidation include the following:

• Payment of Fees Saved on Loan Repayment
You should never accept the requirement of a loan consolidation firm to pay money in return for saving charges on loan repayment. Some students report that they have been asked by these agencies to pay off as much as 20% of the charges that could amount to the thousands.
• Part Payment of Loan Amount
If the loan consolidation firm requests you to pay a part of the loan amount as a requirement for consolidation, then you should realize that it may be a scam. You should remember that you are legally entitled to have all you previous loan amounts paid off by the student loan consolidation agency.
• Payment of Monthly Fees
You should avoid paying monthly fees to the loan consolidation firm. The fees are charged in lieu of servicing your account. This may indicate that the loan consolidation program is a scam.

Consideration of these points will lower the chance of being swindled by debt consolidation frauds. You have to take every precaution prior to signing an agreement with a loan consolidation firm. Prior to selecting a loan consolidation firm, you should do your homework and research extensively to make sure the firm that is consolidating your loan is genuine and reliable.