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Call Kurtis: I Paid My College Debt, So Why Is The Government Taking My Tax Refund?

AUBURN (CBS13) — The cost of a college education can take a lifetime to pay off. When an Auburn woman finally paid off her loan she says the government stepped in and garnished her tax refund, not once but twice.

"And I was like what," said former student Rebecca McGuire.

McGuire says she paid off her student loan in 2012 with a cashier's check, eliminating her student debt for good. "No more debt, that's a huge check $13,613," said McGuire.

So why at tax season did she get a letter saying the feds were keeping her tax refund for $2,449, for quote "a debt you owe" to the "US Department of Education."

McGuire says the DOE admitted it was a mistake but it took six months before she finally got her money. "It shouldn't take six months to get my money back to me, especially if they made an error…," said McGuire.

Then two years later, they garnished her tax refund again for the same reason. "They say 'oh it won't take that long this time to get your money really sorry,' accounts McGuire.

Though now she wants to know how long they have to pay you back and is she owed interest.

"There was a breakdown of communication," said Tax Attorney Betty Williams.

We brought the case to two different tax attorneys who say cases like these are rare. Williams thinks taking six months is too long to return the money and Attorney Steve Packey says the Internal Revenue Service charges Americans three percent interest when they are late.

Packey thinks that's what McGuire may be owed for the time she had to wait to get her tax refund.  "I think she should ask for it from the IRS that's who took her refund," said Packey.

The Department of Education told us it could not talk about McGuire's case, but said once you pay off a student loan, you should get a letter that acknowledges a debt has been paid in full.

Though that is something McGuire says she never got. "They need to do something to fix their system because it's broke," said McGuire.

Finally, after three and a half months McGuire got this year's tax refund back from the government, although she wonders. "Did they really clear it up is it going to happen to me again next year," said McGuire.

We put pressure on the Department of Education for more than two months before we got an answer admitting that the payment McGuire made back in 2012 did not post in a timely manner but could not give an explanation.

McGuire told us she plans to pursue interest from the Federal Government, for the time she went without her money.

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