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.
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.
“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.
More From GOBankingRates