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.” However, student loan borrowers who are behind on their payments may miss out on this opportunity. 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.

Understanding the Impact on Borrowers

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. “Many borrowers in default are struggling financially in other areas and often count on their refunds to catch up on other bills such as rent or car payments,” Mayotte said. “Finding out their entire refund has been taken can be a severe blow.” As of Dec. 26, the average refund for individual returns was $3,167 during the 2025 filing season, up slightly from $3,138 in 2024, according to the latest IRS data.

More than 42 million Americans hold student loans, and the outstanding debt exceeds $1.6 trillion. Defaulted borrowers still have time to take steps to protect their tax refunds this year, experts say. To avoid having their tax refunds seized, borrowers should first determine if their debt is actually in default. They can log into their account at Studentaid.gov to see how far behind they are; a pink banner on their dashboard may show up if their debt has officially reached default.

Protecting Your Tax Refund

Borrowers worried about the fate of their tax refund should explore all their repayment options if they are delinquent but not yet in default, said Nancy Nierman, assistant director of the Education Debt Consumer Assistance Program in New York. “You may be eligible for a more affordable payment plan based on your income,” Nierman said. Enrolling in a forbearance or deferment should also stave off collection activity for a period, she added. If a borrower does learn that they’re in default, they should contact the government’s Treasury Offset Program’s call center at 1-800-304-3107.

Borrowers in default “need to call right before they file their taxes,” said Kyra Taylor, a staff attorney at the National Consumer Law Center. The government generates a list of people who are in debt to different agencies and may have their tax refunds garnished. Borrowers will be asked to provide their Social Security number to learn if they are on the list, Taylor said. “If their name is not on the list, they’re likely in the clear,” she said. If a borrower is on the list for garnishment, they’ll want to take steps right away to get current on their loans — and ideally before they file their taxes, Taylor said.

Getting Current on Student Loans

Getting current on student loans or taking steps to do so may stop the government from seizing a borrower’s tax refund. However, it can take between 30 days and 10 months to get out of default, so some borrowers may consider requesting an extension to file their tax return, Taylor said. Doing so is easy and free, and automatically extends the deadline to file federal taxes from April 15 to Oct. 15. Applying for a loan consolidation is typically the fastest way to get out of default, Taylor said. The process can be completed in as little as four weeks, she added.

Another way to get out of default is through a loan rehabilitation, which involves making “nine voluntary, reasonable and affordable monthly payments,” according to the U.S. Department of Education. Those nine payments can be made over “a period of 10 consecutive months,” it notes on the StudentAid.gov site. After taking these steps, Taylor recommends calling the Treasury hotline back before submitting taxes. If a borrower’s name is no longer on the garnishment list, they can file with more peace of mind.

Smart Tip for Readers

To avoid potential issues with tax refunds, borrowers should regularly check their student loan status and explore repayment options as soon as possible. For more information on protecting your tax refund from garnishment due to student loan default, visit Here