Social Security, Child Tax Credit and Other Refunds Won’t Be Seized To Pay Delinquent Education Debt

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Federal student loan borrowers who are delinquent on their debt won’t have to worry about tax refunds being garnished until at least November, the Department of Education has announced.

Learn: What Is the Vermont Child Tax Credit? How $1,200 Payment Compares to Federal Benefits
Find: Child Tax Credit: How To Claim the Full Amount On Your 2021 Taxes

The agency suspended the seizure of tax refunds — including those tied to Child Tax Credits — as well as Social Security and other government payments until Nov. 1, 2022, CNBC reported. That should come as a relief to the estimated 9 million people who have a federal student loan in default, which means they’ve fallen at least 270 days behind on payments.

As GOBankingRates previously reported, there had been reports that the government might garnish Child Tax Credit refunds from delinquent borrowers during the current tax season. But last week, an Education Department official said there were no plans to do so.

The November extension gives delinquent borrowers even more time to formulate a strategy to get caught up on their federal student loans.

All federal student loan borrowers have had a pause on payments during the COVID-19 pandemic. That pause was extended to May 1, 2022 by President Joe Biden.

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The Education Department and other federal and state government agencies have the legal right to collect delinquent debt through the Treasury Offset Program, which lets them seize tax refunds and other government payments to recover delinquent debt.

But the Education Department decided not to start collecting again via the Treasury Offset Program until six months after the COVID-19 payment pause ends, CNBC noted.

See: What 2022 Means for Stimulus Checks and the Child Tax Credit
Teens & Taxes: I Received a Child Tax Credit for My College Student – Do They Need to File Taxes?

“This policy means you won’t lose money from certain government payments, such as the child tax credit, Social Security payments, and tax refunds for the 2022 tax season,” according to the Education Department website.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.
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