Lots of people in New Jersey and the Gloucester County area are struggling with paying their federal student loans.  Many have missed out on tax refunds because the federal government took them (called an "offset" or an "intercept").  But this doesn't have to happen!

Could It Happen To Me?

Intercepts happen when your loan is in default.  This happens when payments are 270 days (9 months) past due.  If you are current, great.  If you are in a deferment or forbearance, also good (just make sure it is not due to expire before you file your tax return).

If you are less than 270 days behind, then try to get current.  If you need more time to do it, then get under the cover of a deferment or a forbearance while you work something out with your loan servicer.

But What If I Am In Default?

If you want to protect your tax refund there is a way to do it, but it requires some advance planning.  According to an agreement made between the loan guarantee agencies and the federal Department of Education, a written notice of offset must be sent to you giving you 65 days to respond.

This notice must inform you of your rights to:

  • Inspect copies of the Department's records (including promissory notes)
  • Enter into a voluntary repayment plan in order to avoid offset
  • Request a hearing/review to dispute the debt

If you do nothing, then your account is certified for offset, and you will eventually lose any refund you may be entitled to for that tax year. Don't let this happen!

What Should I Do?

These notices are usually sent out in July and August each year.  Thus you should plan to make some payments on the loans prior to that and then negotiate a payment plan to rehabilitate your loan and get out of default.  After certification is issued, offset can only be avoided by:

If your loan has been certified for the offset, then you need to get out of default before filing your return.  This may well involve getting an extension if you need more time.

Need Help?

A refund intercept, much like a Notice of Administrative Wage Garnishment (AWG), should serve as a wake-up call that you need to do something about your student loans.

If you are looking for a solution to your student loan problem and wondering if there is one, then there is a great way to find out for free! Just click here to provide me with all the details on your loans. I will then, for free and with no obligation on your part, look at your situation to see if I can provide you with a way to deal with them. If there isn't one, it didn't cost you anything. If there is, then I will contact you to schedule an analysis session with my office to lay out a plan of action.

If you would also like more information about student loans, you can dowload my free book, I Graduated; Now What? A Guide to Dealing with Your Student Loans.

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Steven J. Richardson
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Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.