Tax Day was last week, and many Filers got Federal Tax Refund Checks or are awaiting them. Unfortunately, many who are counting on getting that extra boost of Money when they File may find that the Government is keeping the Money. National Student Loan Debt continues to Balloon, but the Federal Government thinks some of that Debt is a Loan Default and that Means less of a Refund for some.
Reviews show that the U.S. Department of the Treasury during the 2017 Federal Fiscal Year collected nearly $2.6 Billion owed on Defaulted Federal Student Loans.
The Total represents the Highest ever in terms of Dollar Collections, according to Treasury's Bureau of the Fiscal Service. A look at these Numbers shows that the Student Debt Crisis is far from gone, and it isn’t going to go away unless we do something about it. Too many People are in the Position of wanting to Pay, but being Unable to.
The Collections, representing more than 1.3 Million Defaulted Federal Student Loans, also increased by $200 Million from the 2016 Federal Fiscal year. Collections for Federal Student Loan Debts have risen steadily as the Department of Education's Debt Portfolio increases, according to the Treasury Bureau. Formally known as Tax Refund Offsets, the Government Seizures have taken place even as Total U.S. Student Loan Debt has ballooned to an estimated all-time high of $1.4 Trillion. Nearly $5.8 Billion in Direct Federal Student Loans entered First-Time Defaults from July through September last year, the Highest Quarterly Total since at least 2015, Government Records show.
While Uncle Sam may be pleased to be Recovering more Money, this trend comes at a Cost. These Seizures can actually be Counterproductive and keep a struggling Borrower in Poverty. Taking a large chunk of Cash a Student Borrower has been counting on can have dire effects. According to a recent Report from the National Consumer Law Center, many Low Income Borrowers depend on the Tax Return for a Roof over their Heads.
One of the most common Complaints from Borrowers is that Losing their Tax Refund will impact their Ability to stay in their Home or to move their Family into a Safe Home. Many Borrowers reported being behind on Rent or Utilities and had been relying on their expected Refund to get caught up, and to ensure that they could Stay in their Homes.
The Government is getting more Money that is Owed to them, but at what cost? Is it truly helpful to Punish Low-Income People who “did the right thing” and got an Education by taking away one of the New Extra Boosts of Money they’ll ever have? By trying to Repay Debts by Seizing Families’ Earned Income Tax Credit (EITC). something is meant to help the most Financially Vulnerable, keeps them in a Vicious Cycle that got them into Financial Trouble in the first place.
NYC Wins When Everyone Can Vote! Michael H. Drucker
