The Confessions of a
Student Loan Collector
The most common complaint against collection agencies is that they advise borrowers a treasury offset can be avoided by making payments. This statement is completely false. Once an individual’s taxes get taken, this will continue until the account is resolved through a formal arrangement. It’ll be up to the borrower to negotiate a formal arrangement…
Continued… (Get the Exclusive interview)
– Mr. Kay
The Rogue Student Loan Collector
The Treasury Offset Program
What is Treasury Offset (Tax offset)?
If you have a defaulted federal student loan it is common for Department of Education to certify you for the “Treasury offset” program. With this program the US dept. of Treasury will offset your Federal and/or State tax return if you fail to take care of your obligation. The most common type of offset is the “tax return” offset in addition they have the ability to offset social security and other benefits. If you have a federal student loan in default almost everything printed from the Treasury department in your name could potentially be offset.
Time after time the Department of Education has been responsible for the largest volume of offsets. Many tax specialists will automatically assume that an offset was caused by Department of Education. Just recently they started the offset of state payments on defaulted federal student loans. Once you become “certified” for the treasury offset it will continue until your student loan is out of default.
What does being “Certified” mean?
For someone that is anticipating a tax return, being “certified” for a treasury offset could mean their tax return will be seized and applied towards their defaulted student loan. Once you are certified you can not simply avoid offset by making voluntary payments. You have the ability to “de-certified” your self by either paying off the loan or by taking the student loan out of default status. You can avoid the offset by paying the balance in full, settlement, completing the rehabilitation payment program, consolidation, or discharge by dispute.
How do I check if I’m “Certified”?
There are several ways to verify your status. A way to check is to contact Dept. of Ed directly, but in most cases their customer service representatives will refer you to the collection agency servicing your defaulted Federal student loan. The collection agency has the ability to provide this information to you. Collection agencies are known to falsely advise you of your status by cleverly wording their statements in their favor. The best route in getting an unbiased answer would be to contact the Treasury dept. directly.
Dept. of Education: (800) 621-3115
Treasury Department: (800) 304-3107
I’m not “certified”…Now what?
Although you might be one of the fortunate ones not certified, it’s still recommended that you start repayment on your defaulted student loan(s) immediately. While your student loan is in default they may certify you at any given time. It’s best to either satisfy the loan by paying the balance off, settling your loan, or by getting out of collections by completing the rehabilitation payment program. .
I’m “pre-certified”… Now what?
If you are pre-certified for Treasury offset you will receive a letter 65 days prior to becoming fully certified. This letter usually includes their intent of the treasury offset, in addition you will receive a balance statement, and a notice of your rights. Please keep in mind that if your current address is not updated in Dept. of Education’s system you will not receive this letter.
What are my rights if I’ve been “Pre-certified”?
- To request a copy of your payment history, and a copy of the original promissory note with your signature.
- To enter into a voluntary repayment plan to avoid the offset from taking place.
- Challenge and dispute the validity of the debt.
