IRS Won’t Seize Child Credit Rebates for Student Debt

The fate of child tax credit payments for defaulted borrowers had been uncertain

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If you’re behind on your federal student loans, there’s one less thing to worry about: The IRS won’t be coming for your child tax credit rebate after all.

That’s according to a spokesperson for the Department of Education, who said the department would ensure child tax credit payments on tax credit rebates wouldn’t be seized from defaulted borrowers, even if the rebate arrives after the student loan payment and collections pause ends on May 1.

“The Child Tax Credit should be accessible, no matter your student loan repayment status,” Education Secretary Miguel Cardona posted in a tweet this week.

Student loan borrowers haven’t had to worry about the IRS taking their defaulted debts out of their tax rebates since the pandemic hit, because a pause on student loan payments and interest also suspended all debt collection. In addition, the law that established last year’s expansion of the child tax credit (to a maximum of $3,600 per child) protected the portion of the credit—as much as half—that was delivered via advance monthly payments last year from such collections. However, the possibility had remained that the government could seize the other part, which is being delivered via income tax rebate once the pause expires.

Normally, the Department of Education is allowed to intercept federal payments like tax refunds and even Social Security disability payments to satisfy government debt as part of a procedure called the “Treasury offset."

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