Recovery Rebate Credit vs Student Loans in Default

[Ma44]

Hello,

What happens when someone has federal student loans in default and has filed 2020 taxes and has claimed a recovery rebate credit for stimulus check 2? 

I understand that Private lenders cannot garnish the stimulus or recovery rebate credit unless there is a court order to recover debt and that the stimulus and tax returns are protected from government garnishment at this time. However there is no clear information in regard to whether the recovery rebate credit is protected from being seized as a result of student loans in default. 

Anyone just experienced any of these scenarios or have any insider knowledge?

Much appreciated,

[MaryK4]

Unfortunately, because they Rebate Recovery Payment is part of your tax return, it may be offset for student loans in default.  The Consolidated Appropriations Act retroactively revised the CARES Act and effectively directed the IRS to apply regular offset rules to the RRC. When Congress originally started the stimulus payments, they specifically wrote into the law that there would be offsets only for child support.  However, when the December law was passed, they did not include the restriction.  By law, the IRS can stop offsets for tax debt only.