Student loan borrowers in default now able to keep tax refunds

Student loan borrowers in default will temporarily be able to keep their 2026 federal tax refunds because the government has paused using them to collect on defaulted federal student loans.

What changed

• The U.S. Department of Education announced in mid‑January 2026 that it is temporarily delaying involuntary collections on defaulted federal student loans, including wage garnishments and seizures of tax refunds through the Treasury Offset Program.

• This pause reverses earlier plans to aggressively use tax refund offsets during the 2026 filing season and is meant to give borrowers time while new repayment options under recent legislation are implemented.

What this means for your refund

• If you are in default on federal student loans, your 2025 tax-year refund paid in 2026 is, for now, shielded from being taken to repay those loans while this pause is in effect.

• The pause is not permanent; officials and experts are warning that offsets could restart later, so refunds may be at risk again in future tax seasons once collections resume.

What borrowers should do now

• Check your loan status (through your servicer or the federal student aid website) to confirm whether your loans are in default, and watch for any notices about Treasury Offset or collections restarting.

• Use the extra time to start getting out of default if you can, such as by entering loan rehabilitation or consolidation into a new repayment plan, so that when the pause ends you are less exposed to wage garnishment or refund seizure.