Student loan offset: will your 2027 tax refund be taken

Where student loan offsets stand now

As of September 2026, the Department of Education is not using the Treasury Offset Program to take tax refunds for defaulted federal student loans. On January 16, 2026 it announced a delay of involuntary collections, naming both the Treasury Offset Program and administrative wage garnishment. The press release gave no end date, and the page had not been updated with one when it was last reviewed on August 27, 2026.

That leaves the 2027 filing season, when tax year 2026 refunds are paid, open. No announcement says whether a student loan offset will apply to those refunds. We will update this page when the Department publishes a restart date or extends the delay.

What the Education Department announced, and why student loan offsets are suspended

The Department said it paused collections so it could put in place repayment changes made by the Working Families Tax Cuts Act. Those include a new income-driven repayment plan that began July 1, 2026, with unpaid interest waived for on-time payers and a Department contribution in some cases. The Department also pointed to a second chance at loan rehabilitation for defaulted borrowers, where the old rules allowed only one.

The pause does not erase defaults. The Department said it continues to report defaulted loans to the credit bureaus and urged borrowers in default to contact their servicer during the delay.

How a student loan tax offset works when collections are on

In Treasury terms a defaulted federal student loan is a non-tax student loan offset, the same category as other debts owed to federal agencies. It comes after federal tax debts and child support in the payment order set by 26 U.S.C. 6402, but ahead of state income tax debts. Up to 100% of a federal tax refund can be taken.

Federal agencies must mail a notice of intent at least 60 days before referring a debt to the Treasury Offset Program, and must refer non-tax debts more than 120 days delinquent. A borrower who got a notice in 2025 may still be listed in the database. Referral alone does not mean money will be taken while the pause lasts, but the listing can remain until the Department recalls it.

Our tax refund offset overview lists every debt type and the notices each one produces, and child support refund offsets explains the debt that is paid ahead of student loans.

How to avoid a student loan offset on your 2027 refund

The pause is temporary, so treat it as a window to fix the default rather than a reason to wait. The Education Department names three routes out of default: loan rehabilitation, enrolling in an income-driven repayment plan, and making monthly payments under an agreement.

1. Log in to StudentAid.gov and confirm which loans are in default and who holds them.
2. Contact the Default Resolution Group at myeddebt.ed.gov, or your servicer for loans not held there.
3. Ask for rehabilitation terms or an income-driven payment amount, and get the agreement in writing.
4. Ask how long it takes for the loan's Treasury referral to be recalled once you are in good standing.
5. Keep your payment confirmations, since they are your evidence if an offset happens anyway.
6. If you file jointly and only your spouse has the defaulted loan, prepare Form 8379 before you file.

If your refund was already taken for a student loan

Offsets taken between May 2025 and the January 2026 pause went to the Department of Education to reduce the loan balance. The pause announcement covers future collections. It did not say that offsets already taken would be returned.

• Wrong person, paid off or discharged loan: dispute with the Department using the contact on the Bureau of the Fiscal Service offset letter.
• Joint return, loan belongs to your spouse: file Form 8379 to get your share back. See our injured spouse Form 8379 guide.
• Returned money: if the Department agrees to reverse an offset, see how it appears in refund offset reversals.
• No letter: call the Treasury Offset Program automated line to confirm which agency took the refund, as described on our Treasury Offset Program page.