A Virginia State taxes levy has been issued. Can VA take my Federal Student Loan Refund check?

Asked 9 months ago - Virginia Beach, VA

I owe State taxes. I borrowed more money than was needed to pay for tuition and books at a the community college from Federal Student Loan funds. A refund check will be issued. The refund is to be used for national and state board exams. Can VA take my refund check and apply it to the state taxes due?

Attorney answers (2)

  1. Benjamin John Upton

    Contributor Level 11

    1

    Best Answer
    chosen by asker

    Answered . Under 20 USC ยง 1095a(d), student loans and the proceeds of student loans cannot be garnished to satisfy any debt except for certain educational debts. This applies to both Federal and State debts, and should protect you from your State taxes. However, it is important to put the State on notice of this provision - I would recommend opening a separate bank account, putting this check into it, and making sure to never put funds from any source besides Federal Student Loans into this bank account. When funds are co-mingled, there is a risk that they may lose their unique character as protected, which could put your funds at risk.

    This response is not offered as legal advice, but is only a general informational response for public interest. No... more
  2. Jason Meyer Krumbein

    Contributor Level 12

    Answered . Sort of.

    While the money is at the Federal Government, it is not subject to seizure.
    Once the money is deposited in your Bank account, it is subject to seizure.
    If the money is paid directly to the school, it never goes through your bank.

    Hope this perspective helps.

    Mr. Krumbein is admitted to the courts of Virginia. His advice is often based on Virginia and Federal law,... more

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