The student loan tax offset program resumed in 2024. If you have federal student loans in default, your 2025 tax refund may be at risk. If you're behind on payments, try using a student loan calculator to help come up with a repayment strategy and contact your student loans servicer about getting caught up.
You don't get reported when you're in forbearance. During the on-ramp period (through Sept. 30, 2024), we automatically put your loan in a forbearance for the payments you missed. Here's what this means: Your account was no longer considered delinquent and was made current.
Federal Loan Interest Rates Increased
However, federal rates skyrocketed in 2024. Loans for undergraduate students issued between July 1, 2024 and June 30, 2025 will have a 6.53% rate, 1.13 percentage points higher than the rate on the same loan type last year.
Those who are in default could risk having their tax refund seized come tax time. You might be planning on getting a tax refund in 2025 but if you're in default on your federal student loans, your refund could be at risk.
The Fresh Start program for borrowers with previously defaulted student loans will prevent withheld tax refunds through at least September 2024. And borrowers won't newly fall into default as payments resume. The White House announced a 12-month student loan on-ramp from Oct. 1, 2023 to Sept.
Once you have confirmed it is not a scam, you can take steps to try to stop the tax refund offset by requesting a review. To request a review, contact your loan servicer. If you do not know who your loan servicer is, you can also contact the Department of Education Default Resolution Group.
Why did my college send me a check? A refund check is money that is directly deposited to you by your college. It is the excess money left over from your financial aid award after your tuition and additional fees have been paid. Your college may send you a check or the money may be deposited into your checking account.
Under certain federal programs, it's possible to get your student loans forgiven after 20 years of qualified payments. Private student loans, however, typically don't have forgiveness options, regardless of how long you pay them.
If you default on your student loan, that status will be reported to national credit reporting agencies. This reporting may damage your credit rating and future borrowing ability. Also, the government can collect on your loans by taking funds from your wages, tax refunds, and other government payments.
The one-time account adjustment, also known as the payment count adjustment, has been a significant initiative in providing loan forgiveness to many borrowers. The deadline to qualify for this program has recently been extended to June 30, 2024, allowing more borrowers to benefit from the change.
In July 2024, AFT sued MOHELA for a wide range of unlawful practices, including illegally executing a “call deflection” scheme to deny service to borrowers who need help.
New guidance from the U.S. Department of Education indicates borrowers should expect the pause to last six months or longer. The department first implemented the forbearance in August 2024 due to ongoing litigation between the department and seven states challenging the debt cancellation effort's legality.
You may be eligible for income-driven repayment (IDR) loan forgiveness if you've have been in repayment for 20 or 25 years. An IDR plan bases your monthly payment on your income and family size.
You can check your federal student loan status by logging into StudentAid.gov with your FSA ID. When you select your loan, you can see if the status is listed as default. You can also check your federal or private loan status by checking your credit report.
You can take a tax deduction for the interest paid on student loans that you took out for yourself, your spouse, or your dependent. This benefit applies to all loans (not just federal student loans) used to pay for higher education expenses. The maximum deduction is $2,500 a year.
After at least 20 years of student loan payments under an income-driven repayment plan — IDR forgiveness and 20-year student loan forgiveness. After 25 years if you borrowed loans for graduate school — 25-year federal loan forgiveness.
If you work full time for a government or nonprofit organization, you may qualify for forgiveness of the entire remaining balance of your Direct Loans after you've made 120 qualifying payments—i.e., at least 10 years of payments. To benefit from PSLF, you need to repay your federal student loans under an IDR plan.
Starting in July 2024, payments for borrowers with only undergraduate student loans will be cut in half. Those monthly payment amounts are currently calculated to be 10% of your discretionary income, but in July 2024 that number will drop to only 5% of your discretionary income.
All things being equal, it might. Your tax refund may be bigger this year due to inflation-related changes to the standard deductions and tax brackets for 2024. These adjustments could translate to a bigger tax refund compared to 2023 if your income, withholding, filing status and tax credits stay the same.
Can I get a refund if I already received forgiveness or paid off my loan? No. If you have already received forgiveness or paid off your loans, you are not eligible for a refund of prior payments.
For 2024, there's an offset of $700 for taxpayers with a taxable income under $37,500, with a pro-rata payment up to $66,667.
You should receive notice if your refund is going to be offset. If you haven't received notice, contact your student loan provider to determine if they intend to offset your refund.
Can student loans in collections be forgiven? Yes, student loans in collections can be forgiven. Through the DoE's Fresh Start Program, borrowers with defaulted federal student loans can return to making payments without a past-due balance.