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Valued Member
Posts: 58
Registered: ‎12-07-2011
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Tax Returns and Student Loan Rehabilitation

Last month I started a loan rehabilitation with GC Services for my defaulted Stafford Loan.  Last year my loan wasn't in default at tax time so I received my refund.  My question is will my refund be seized this year becuse I will not have completed the rehabilitation program yet?

 

It was my understanding that once entering the loan rehabilitation program all other collection efforts would stop. Does anyone have any experiece with this?

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Established Member
Posts: 18
Registered: ‎10-31-2011
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Re: Tax Returns and Student Loan Rehabilitation

I have experience with this. I did a loan rehabilitation with GC services in 2009. Yes, you will lose your tax refund. However, if your refund more than covers what you owe, you will get a check back from the dept of education. That's what happened to me. I kept paying and paying, and finally after 9 months when it ended, I got a refund from them because I had over-paid.

 

It really comes down to how much you owe in student loans and the amount of your tax refund. Even though collection efforts have stopped, it doesn't mean your loan isn't in default (it still is) and will remain that way until you complete your 9-10 payments.

10/3/11
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Valued Member
Posts: 58
Registered: ‎12-07-2011
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Re: Tax Returns and Student Loan Rehabilitation

Thanks I appreciate that!  What was your experience with GC Services?  Did they remove the negative information in a timely way? Easy to work with?

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Posts: 32,869
Registered: ‎08-04-2007
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Re: Tax Returns and Student Loan Rehabilitation

Post split to start a new thread in order to keep the other on-target

Member
Posts: 12
Registered: ‎09-19-2011
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Re: Tax Returns and Student Loan Rehabilitation

Off topic, but im also curious as to your experience with GC Services.
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Established Member
Posts: 18
Registered: ‎10-13-2011
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Re: Tax Returns and Student Loan Rehabilitation

You could extend your tax return due date until 10/15/12 (it is automatic - just file the form).  Then, when you complete your rehabilitation program around August, file the return and receive your refund.

Established Member
Posts: 18
Registered: ‎10-31-2011
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Re: Tax Returns and Student Loan Rehabilitation

Yes, I did go through the process with GC services and yes they removed all negative information.

 

As another poster mentioned, file an extension to October. Great idea. Then when all is paid on the loan, you'll get your refund back. However, if you over pay now you'll get it back soon enough anyway. I got a refund check from the Dept of Education.

10/3/11
TU 590 & Exp Plus 636
11/26/11 *Updated*
(Lender pull) TU 626, EQ 622 & Exp 667
Valued Member
Posts: 58
Registered: ‎12-07-2011
0

Re: Tax Returns and Student Loan Rehabilitation

I actually ended up calling GC Services and they told me that my account hasn't been flagged yet for an IRS return offset. If you enter into a rehab program relatively quickly you might be lucky enough to catch the loan before your social security number gets tagged with the IRS.

 

They gave me this toll free IRS number to call to check to see if your social has been flagged for a return offset. If your social security number is clear and you are already in rehab then you should be good.

 

IRS Tax Offset Hotline 1800 304 3107

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Member
Posts: 11
Registered: ‎01-18-2014
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Re: Tax Returns and Student Loan Rehabilitation

I too have student loans that are currently being rehabilitated.  I let them go way too long, just for lack of being overwhelmed and not knowing how to handle them.  I woke up one day and decided that "today's the day that I am handling my loans, head on!"

  I have them with 2 different companies.  The first being CTI (private collection company contracted by the feds and US Dept of Education) with a debt totalling $19,000.  After working with a collections representative, my loans were rehabbed and after providing my financials, I was given what is a truly "reasonable and affordable" payment that works well with my financial situation (WOOHOO!! small win for me on that one!).  In the process I realized that I was set up for a Tax Offset through the US Dept of Education (no big surprise on that one).  My collections rep at CTI told me that they have nothing to do with tax offsets certifying or decertifying them and that I needed to contact the US Dept of Ed.  I contacted the US Dept of Ed and they told me that I will stay on the TOP database until my loans are out of rehab and are sent back to the lender.  Seeing as this info was coming from the US Dept of Ed, I understood it as "concrete information."

However...

While dealing with my second batch of defaulted loans (totaling $20,000) which are being held with my Guarantor at the Michigan Guarantor Agency (State of Michigan).  I went through the same process to receive a "reasonable and affordable" payment.  But, when I questioned him about my tax offset, he informed me that it was Federal Law that after 4 on time payments that you be removed from the TOP database.  I have done MUCH research regarding this!!!  So far, I've come up with nothing concrete or consistent!!  I've found a lot of blogs with people in similar situations saying that some were removed from the database as soon as they signed the rehab papers, some 2, 4, or 6 payments later, and some upon completion.  I am expecting a large return and as we are living week to week in my house right now, I'm just looking for a timeline of when I can expect to come off of the TOP database and it seems noone knows!!  I keep getting referred from collections, to Dept of Ed, to the FMS, to the Dept of Treasury...no 2 answers have been the same!!  Obviously, I'm waiting to file my taxes until I'm clear. But when??

Has anyone heard or kow of any such federal law that says you must be removed after 4 payments??  Or how to find this info and supporting documentation??  I have a review coming up in 5 days and I'd like to be armed with that info (if it exists) to get some clarification as to when I'm coming off the TOP database.  Any and all input would be helpful!

New Contributor
Posts: 59
Registered: ‎10-19-2013
0

Re: Tax Returns and Student Loan Rehabilitation

I know this might not be of much help, but I'm currently in the rehab process with two group of student loans that were in the offset program last year.  My loans are with EOS (Sallie Mae) and Texas Guarantee.  My last payment (number 9) is due in the middle of Feb.  I was told that there would be no collect of my refund this year since I'm in the program.  Just now I called the toll free number provided above and confirmed that there are no debts against me that would cause an offset.  My understanding is that once in the program, you will be able to avoid any offset by the IRS.

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