Some students who default on their Stafford Loan payments will be left with empty pockets during tax refund time.
According to Illinois Student Assistance Commission (ISAC) spokesperson Robert Clement, all ISAC student loan recipients who make no payments for 120 days by Nov. 22, 1991, might lose their federal tax refunds.
“The government has demonstrated once again its commitment to crack down on student loan defaulters,” Clement said.
Students defaulting on payment were notified in September and their loans were assigned to the U.S. Department of Education, which in turn assigned these loans to the Internal Revenue Service (IRS), he said.
If the student does not pay the loan in full or through a repayment schedule approved by the IRS, the student will not receive their federal tax refund, Clement said.
“This has been very successful,” he said, adding the Illinois default rate has been “pretty good.”
He said this is just another method the government uses to collect loan payments, and it “affects all loans around the state.”
According to Ronald Elliott, Students Loans Receivable, NIU loans such as the Perkins Loan, do not use these processes. “We are not allowed to do that here, only under certain circumstances,” he said.
Clement said he urges any student who has received a letter to contact the ISAC as soon as possible and work out a payment plan.
This is the seventh consecutive year the ISAC, IRS and the Department of Education have entered into this agreement and statistics show defaulted borrowers are repaying their student loans, Clement said.