Feds won’t seize tax refunds and Social Security for student loans until fall
The federal Department of Education will not seize tax refunds, social security payments or other government payments from those with delinquent student loans until at least November, according to CNBC.
About 9 million federal student loan borrowers are in default, meaning they are at least 270 days behind on payments, CNBC said. The Ministry of Education is authorized to collect this debt by intercepting certain government payments.
Recovery actions have been halted since the start of the Covid-19 pandemic, as well as regular loan repayments and interest.
Loan repayments are set to restart on May 1, prompting fears that the government will also start to seize tax refunds, credits and other benefits after that date, according to CNBC.
But the Department for Education has now said it will not restart these collection actions until six months after the end of the Covid payment break. That would be after Nov. 1, if the hiatus isn’t extended again, according to CNBC.
“This policy means you won’t lose money on certain government payments, such as Child Tax Credit, Social Security payments, and tax refunds for the 2022 tax season,” the website says. the agency, according to CNBC.
According to Forbes, federal student loan repayments and regular interest rates are still expected to resume on May 1. Supporters are pushing President Joe Biden to extend the relief beyond May.
The Department for Education announced another round of student loan cancellations earlier this month. Nearly 16,000 borrowers will benefit. The loans concerned amount to 415 million dollars.
Since taking office, the Biden administration has written off billions in student loan debt, but the moves represent only a small portion of the U.S. total. Nationally, student loan debt amounts to nearly $1.8 trillion and is held by 43 million people.