Fredericksburg, VA asked in Education Law and Tax Law for Virginia

Q: Can you go after The Department of Education for wrongfully taking full tax refund

My student loans were in default but through the department of education I was placed into a rehabilitation program. I made every single payment each month, I never missed a single one. I am out of default and made all required payments to the program. My tax refund was taken in full by the department of education. Each time I call I am given totally different reasons why my refund was offset. Each reason have been for the most part, technical errors that fall on the recovery program I was in. I had to call the recovery program and have them change payment dates so they matched the department of Ed. System. That was not an error made by me, I had an automatic payment plan set up. I just had another baby and currently not employed. This return was vital for my family. I have been fighting with the department since March and still have zero answers. How can I be out of default because I made all required payments but still have my return taken? Please help.

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1 Lawyer Answer

A: The Department of Education did not violate any laws by taking your IRS refund check as partial payment on your federally insured student loan. Regardless of whether or not your rehab program is up-to-date, the fact remains that you are still in arrears on the student loan debt. Additionally, since the balance on your loan was paid down by the amount of the refund, you have benefitted by that action--even though you did not want it to happen that way. This same problem will re-occur annually, so be warned.

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