Yes, student loans cannot be taken directly from taxes during Covid as the Department of Education has suspended wage garnishments and tax refund offsets until September 30, 2021.
Explanatory question
During the Covid-19 pandemic, the question of whether student loans can take taxes has been a concern for many. The good news is that the Department of Education has implemented measures to alleviate the financial burden on borrowers. Until September 30, 2021, wage garnishments and tax refund offsets for student loans have been suspended.
This temporary relief offers students and graduates some breathing room during these challenging times. By suspending the collection of student loan debts through tax refunds, the government aims to provide financial stability and support individuals who may be facing financial hardships due to the pandemic.
To provide a perspective on this topic, let’s consider a quote from American author and journalist Walter Lippmann: “The study of economics does not seem to require any specialized gifts of an unusually high order. Is it not, intellectually regarded, a very easy subject compared with the higher branches of philosophy or pure science? Yet good, or even competent, economists are the rarest of birds. An easy subject, at which very few excel! The paradox finds its explanation, perhaps, in that the master-economist must possess a rare combination of gifts. He must reach a high standard in several different directions and must combine talents, not often found together, in a very high degree.”
Now, let’s delve into some interesting facts about student loans and taxes:
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Tax refund offsets: In normal circumstances, the federal government has the authority to seize tax refunds to offset defaulted federal student loans. However, during Covid-19, this practice has been suspended to provide relief to borrowers.
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Wage garnishments: In addition to tax refund offsets, the Department of Education typically has the power to garnish wages of individuals who have defaulted on their student loans. However, this practice has also been paused until September 30, 2021.
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Temporary relief measures: The suspension of wage garnishments and tax refund offsets is part of the temporary relief provided by the CARES Act, which was enacted to counter the economic impact of the pandemic. These measures offer individuals some financial reprieve during a challenging economic period.
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Extended relief: While the relief measures mentioned above are set to expire on September 30, 2021, it’s worth noting that the government may extend these provisions further if needed. The situation remains fluid, and updates from the Department of Education should be monitored for any changes.
To summarize, during the Covid-19 pandemic, student loans cannot be taken directly from taxes, thanks to the temporary relief measures provided by the Department of Education. This suspension of wage garnishments and tax refund offsets aims to support borrowers who may be facing financial hardships. As we navigate these challenging times, it is crucial to stay informed and updated on any changes and extensions to these relief measures.
Answer in video
During the coronavirus pandemic, various forms of financial relief are available for borrowers. Homeowners with a Fannie Mae or Freddie Mac-backed mortgage may be eligible for up to a year of paused or reduced mortgage payments if they have lost their job or income. However, missed payments will still need to be repaid. Additionally, interest on federally-held student loans will be waived, allowing borrowers to pause their payments without penalty for at least 60 days. The deadline for filing federal income tax returns has been extended by 90 days, with the deadline for payments also being pushed back.
There are also other opinions
Will your tax refund be garnished? Only federal student loans in default can subject your tax refund to garnishment. Federal student loans enter default after 270 days of past-due payments.
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In 2023, student loans will not take your tax refund due to an ongoing pause on collections through Treasury offset, lasting six months after the COVID-19 payment pause ends.