Washington, D.C.—Today, Representatives Jamie Raskin (MD-08) and Alma Adams (NC-12), Ranking Member of the Subcommittee on Higher Education and Workforce Development, led 21 of their colleagues in a letter to Secretary of Education Linda McMahon requesting information regarding the improper seizure of tax refunds by the Department of Education (ED) from student borrowers in default.
On April 21, Secretary of Education Linda McMahon announced that the Trump Administration would resume collections on defaulted student loans for the first time since the COVID-19 pandemic pause. As part of the collections process, ED has since seized tax refunds from over 80,000 student borrowers, a step which requires a 60-day notice under federal law. Many of the latest seizures reportedly appear to rely on a notification ED issued five years ago, prompting the lawmakers to solicit answers from Secretary McMahon.
“These seizures have already led to evictions and utility shutoffs that are harming American families,” the lawmakers wrote. “A majority of Americans who receive tax refunds use the money to finance everyday living expenses, meaning that the 80,000 taxpayers affected by the most recent offset have lost a financial lifeline.”
Rep. Raskin and Rep. Adams’s letter further expresses concerns about the quality of the records ED is using for collections and the agency’s workforce shortages as 10 million borrowers approach default.
“Assessments of third-party student loan servicers’ processing failures, including assessments by the Consumer Financial Protection Bureau’s Student Loan Ombudsman and the Government Accountability Office, have revealed systemic failures on the part of both third-party servicers and the Department,” the lawmakers continued. “In many cases, student loan servicers have failed to accurately process borrower payments or update key information on a borrowers’ path to repayment. These errors are likely affecting the accuracy of the balances being referred [for collections]. Compounding this crisis, the Department recently cut the Office of Federal Student Aid (FSA) nearly in half, exacerbating processing and communications delays.”
The letter further explains the importance of the 60-day notice requirement as an opportunity for student borrowers to rehabilitate their loans or apply for hardship relief during a nationwide cost-of-living crisis.
“The cost of grocery staples like eggs, beef, and coffee have shot up over 10 percent in the past year. Rent, mortgage, and utility costs have outpaced growth in wages…Many working-class and low-income Americans rely on their tax refunds to keep their families afloat,” the lawmakers continued.
The letter concludes by soliciting details from Secretary McMahon on the agency’s most recent tax refund seizures and its processing capability ahead of the upcoming tax season.
Rep. Raskin and Rep. Adams were joined in their letter by Reps. Becca Balint (VT-AL), Sanford Bishop (GA-02), Greg Casar (TX-35), Judy Chu (CA-28), Danny Davis (IL-07), Lloyd Doggett (TX-37), Sarah Elfreth (MD-03), Veronica Escobar (TX-16), John Garamendi (CA-08), Jesús “Chuy” García (IL-04), Robert Garcia (CA-42), Sylvia Garcia (TX-29), Summer Lee (PA-12), Frank Pallone (NJ-06), Lateefah Simon (CA-12), Mark Takano (CA-39), Mike Thompson (CA-04), Rashida Tlaib (MI-12), Lauren Underwood (IL-14), Nydia Velázquez (NY-07), and Maxine Waters (CA-43).
The full letter text is available here.