Yes, your refund could be offset for outstanding student loans.The government can take both (federal and state)
of the refunds and apply it to the past due student loan balance. If the refund
balance is more than the defaulted balance then you will get the remaining
refund via check. If the refund balance is less than the defaulted balance then
they will notify you of the new balance.You
can contact the agency with which you have a debt to determine if your debt was
submitted for a tax refund offset or you may call BFS's TOP call center at
(800) 304-3107.
A refund offset is when an IRS refund is reduced or
intercepted to pay off delinquent debt, such as past-due child support, outstanding
student loans, or unpaid state income tax.
You'll get an explanatory
letter from the Bureau
of the Fiscal Service if your
refund is offset.
More info about refund offsets,
including contact info and the appeals process, is on IRS.gov
(Tax Topic 203).