LSNYC Helps Millions of Student Loan Borrowers Consolidate Their Debt, Keep Their Tax Refunds

In 2018, Brooklyn resident Jazmin Unruh found herself trapped in a financial nightmare. Like over a million other Americans that year, Jazmin’s tax refund—including her much-needed Earned Income Tax Credit—was seized by the U.S. Department of Education because her student loans were in default. For Jazmin, this loss wasn’t just a setback; it was a blow to her ability to make ends meet, pay rent, and continue her education. 

Jazmin reached out to Legal Services NYC for help and within weeks, LSNYC helped Jazmin bring her loans current, stopped the tax refund seizures, and secured her eligibility for new student loans all by placing her in an income-driven repayment plan where her monthly payment remains $0 due to her low income. With this newfound financial stability, Jazmin graduated from college and regained control of her future. 

Like millions of others, Jazmin was being deceived by the U.S. Government who failed to explain the income-driven repayment plan option, instead pushing her into protracted and costly installment plans. Each year, the U.S. Government takes about $2 billion in tax refunds from over 1 million borrowers who have defaulted on their loans. 

Realizing this injustice, LSNYC filed a lawsuit on behalf of Jazmin and eight other borrowers alleging that the Department of Education violated borrowers’ constitutional rights by failing to provide adequate notice about how to stop tax refund seizures. As a result, the Department refunded $30,000 to borrowers, changed its practices, and ensured millions of Americans in default now have the tools to protect their tax refunds and regain loan eligibility. 

“Without LSNYC, I don’t know if I would have ever gotten a second chance to complete my degree,” Jazmin said. “They not only gave me a voice but helped change practices that protect millions of vulnerable Americans from poverty.” 

“Money is tight and I wasn’t expecting the government to take my tax refund. All my plans changed when we found out the money was gone. We were planning a trip to see family at the time and it was very frustrating. But I’m thankful to Legal Services NYC and happy to get the money back. It was a big relief and will help us plan for the future, including making sure our kids can have a Christmas this year.”

Saibou Sidibe, an LSNYC client who will receive nearly $3,000 from the settlement

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