President Donald Trump said in December that this spring may be the “largest tax refund season of all time,” due to changes in the “big beautiful bill.” But student loan borrowers who are behind on their payments may miss out.
That’s because the U.S. Department of Education can seize a borrower’s entire tax refund — including their child tax credit or earned income tax credit — if they’re in default on their federal student debt. Around 9 million education loan holders are currently in a default status, according to a recent estimate by Protect Borrowers, an advocacy organization.
The Trump administration announced in April that it would resume Education Department collections activity, after a roughly five-year pause that began during the Covid pandemic. Some borrowers reported having their refunds seized last year, but this will be the first full tax season in which collections on student loan debt are back in force, experts said.
In addition to seizing tax refunds, the federal government can also garnish the wages and Social Security benefits of people who owe it money.
Tax season is “a heartbreaking time of year” for many student loan holders, said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit.
