Culture

The Federal Government Seized A Homeless Woman’s Tax Return To Pay Her Student Loan Debt


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Every year, without fail, the headache known as tax season descends upon us. Americans collectively fill out a labyrinth of financial documents, pray that they don’t make IRS-scrutiny-worthy mistakes, and wait with bated breath for the one possible silver lining: the tax return. These once-a-year returns are a necessary injection of cash for many Americans, and they’re, all too often, a balm for residents in a country that boasts the highest GDP in the world, but where 78 percent of residents live paycheck-to-paycheck.

But if struggling to pay bills has caused you to fall behind on your student loan payments, you may not receive your refund at all. According to CNBC, the government seized $3.3 billion from 1.4 million student loan borrowers’ federal tax refunds this year. That’s an average of $2,357 per person. They’ve seized assets from state refunds as well.

This is what happened to Portland resident, Alexis Patterson, as reported by CNBC. Patterson is a homeless, single mother who is now fighting to get her tax return back from the federal government after they used it to pay off some of her outstanding student loans. She was set to receive a $3,036 tax refund after filing taxes — which she planned to use to secure housing for her and her daughter. Instead, she received a letter stating that her tax return would be used toward her past-due student loans.

For Patterson, like for many whose student loans have defaulted, paying off those educational bills is not feasible. So, she’s fighting to get back her tax return under a program that allows individuals under financial duress to do so. However, according to one expert, that program is for people at risk of foreclosure or eviction, and as Patterson and her daughter have been homeless for several months, she may not qualify.

Recently, presidential candidate Elizabeth Warren proposed cancelling student loan debt up to $50,000 under her higher education plan, and stories like Patterson’s highlight why many are excited about this plan. Currently, student loan debt is different than any other kind of debt — with private companies offering high interest rates and extremely limited options for loan forgiveness. And it follows you wherever you go. Neither bankruptcy nor, in some states, death is enough to clear borrowers of their educational debts.

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