Most collectors cannot intercept your federal tax refund and apply it in the direction of an excellent debt, however there are just a few, equivalent to Sallie Mae, that may. Through the Treasury Offset Program, funds you obtain from the federal authorities might be taken to repay sure student loans and a restricted variety of different money owed. But having an excellent loan with Sallie Mae would not essentially imply you will not obtain your tax refund.
TL;DR (Too Long; Didn’t Read)
It is feasible to have your federal tax refund intercepted to be able to repay your Sallie Mae loans.
Sallie Mae Federal Loans
Only collectors of student loans which can be assured, or insured, by the federal authorities are eligible to acquire your tax refund via the Treasury Offset Program, no matter whether or not it is Sallie Mae or a distinct firm that companies the loan. But owing cash to Sallie Mae, even when it is for past-due loan funds, will not forestall you from receiving a tax refund — your loan have to be in default earlier than Sallie Mae can take it. Therefore, until you default on a Direct PLUS, Subsidized or Unsubsidized student loan, your refund is secure from Sallie Mae.
Sallie Mae Private Loans
Sallie Mae affords plenty of personal loans to students who want further funds to pay for varsity. If you’re taking out one of these loan and fall behind in your funds or go into default, Sallie Mae nonetheless cannot entry your tax refund, because it is not eligible to take part within the Treasury Offset Program to gather on personal loans. Alternative strategies, equivalent to acquiring a court docket judgment to position liens in your property, garnish your wages and freeze your bank account, can be found to Sallie Mae to gather unpaid personal student loan debt. Therefore, in the event you deposit the tax refund into your bank account and you are not conscious that there is a judgment in opposition to you, the refund could also be inside Sallie Mae’s attain if it decides to freeze your accounts.
Whenever a creditor is profitable in claiming a tax refund, the legislation requires that you simply obtain discover of it. The Bureau of Fiscal Service, or BFS, — an workplace throughout the Treasury Department — will mail a discover to your own home advising you that Sallie Mae has, or might be, receiving your revenue tax refund. The discover will state the quantity of your tax refund and the way a lot of it’s getting used to pay down the student loan, and can offer you Sallie Mae’s deal with and cellphone quantity. If you disagree with something said within the discover or did not obtain one, you may contact the BFS at 800-304-3107. But in the event you’re disputing the debt or the quantity you owe is not right, you may contact Sallie Mae immediately.
Refunds Remaining after Offset
If your tax refund is for greater than you owe Sallie Mae on the defaulted loan, you may obtain the surplus funds in a paper verify or via direct deposit in the event you entered the required account info in your return. The remaining funds, nonetheless, could also be used to repay different money owed you might have with the federal authorities, unpaid state and native revenue taxes, past-due little one help and any unemployment compensation you obtained that you need to return to a authorities company.
Michael Marz has labored within the monetary sector since 2002, specializing in wealth and property planning. After spending six years working for a big funding bank and an accounting agency, Marz is now self-employed as a marketing consultant, specializing in complicated property and reward tax compliance and planning.