NEW YORK, NY (December 8, 2023) – Legal Services NYC announces a settlement with the U.S. government that will help protect the tax refunds of millions of student loan borrowers by requiring the U.S. to make key changes to debt collection notices. The updated notices now inform borrowers of their right to consolidate their debt into an affordable payment plan rather than costly, alternative plans that expose them to tax refund and Social Security offsets. The new notices go into effect immediately, although the U.S. government has paused the garnishing of taxes, wages and Social Security checks until late 2024 as part of the Fresh Start program. With the nation still waiting for a national student debt relief plan, these changes will keep much needed tax refund money in the pockets of low-income borrowers, and require the government to be honest about the different options borrowers have to repay loans on their own terms.
