Three to four nights per week Denise Miner leaves the apartment she shares with her three adult children and one grandchild and spends an hour commuting to Long Island to cook, clean and perform other tasks for members of someone else’s family.

Though Miner loves her work as a home health aide, it takes effort to stretch the money she earns from the job — about $38,000 a year — to cover her Brooklyn rent and expenses for her family. So she was startled a couple of years ago when she got a letter informing her that she wouldn’t be receiving her tax refund, including her entire $1,527 Earned Income Tax Credit, money the government provides working, low-income Americans.

“ Denise Miner discovered that the government was taking her money to repay a student loan she never even knew she had. As a young, single mother in the 1980s, she signed up for courses at a now-defunct for-profit college. ”

Miner, now 51, had been counting on those funds to catch up on her bills and buy other necessities, like blankets and pillows that she couldn’t afford during leaner times of the year. “I cried,” Miner said of receiving the news that her tax refund would be taken. “It was a scary feeling. I had bills to pay.”

After some research, Miner discovered that the government was taking her money to repay a student loan she never even knew she had. As a young, single mother in the 1980s, Miner had signed up for courses at a now-defunct for-profit college, but had to pull out after just a couple of days due to child-care challenges. Miner says she was told by the school at the time that she wouldn’t be charged for enrolling, but decades later, a student loan she says the school took out in her name cost her her tax refund.

“I thought it was so unfair,” Miner said, when she discovered her entire refund, including her EITC, would be taken. “I was, like, I’ve got to do something. I can’t let this happen.”

Struggling to pay student debt? Here's what you need to know.

Ultimately, Miner’s attorney was able to get the loan discharged and her tax refund back because the school drew financial aid on her behalf illegally — she didn’t have a high school diploma when she signed up. But many others aren’t so lucky.

The National Consumer Law Center (NCLC) released a report chronicling the experiences of borrowers who had their EITC seized to pay back a student loan. Some told NCLC they were relying on the refund to improve their housing situation, others said they planned to use it to fix the car they need to get to their job and still others worried that losing the EITC could push them into homelessness.

Millions could be affected

There’s no current tally on how many borrowers lose their EITC each year over a student loan, but the number may be in the millions. A 2009 report from the National Taxpayer Advocate, an internal IRS watchdog, found that more than 1.3 million 2008 tax returns claiming the EITC were subject to “offset” — the term the government uses when it takes a tax refund to pay back certain debts. During fiscal year 2015, the government seized $2.3 billion from borrowers to repay defaulted student loans, of that 91% or $2.1 billion came from federal tax refunds, according to a 2016 report from the Government Accountability Office.

“ The government provides student loans to qualified Americans regardless of their credit history and offers borrowers generous repayment programs to help them stave off default. ”

The government provides student loans to qualified Americans regardless of their credit history and offers borrowers generous repayment programs to help them stave off default, including plans that allow borrowers to pay back their loans on a sliding scale depending on how much money they make. But once a borrower defaults on their debt, the government has extraordinary powers to get that money back, including garnishing a borrower’s wages, Social Security check and tax refund, which can include the EITC, without a court order.

This tactic hurts working single moms

Borrower advocates have long decried these tactics as unnecessarily harsh, particularly because a variety of factors can cause borrowers to default, some of which are totally unrelated to their willingness to repay their debt. Some graduates attended schools that didn’t prepare them well enough to get well-paying jobs (despite claims they would do so), and some loan servicing companies fail to give borrowers the information they need to successfully pay back debts.

Many advocates say they find the practice of seizing a borrower’s Earned Income Tax Credit over a student loan particularly galling. For one, unlike Social Security income, none of that money is protected from offset — the government can seize 100% of a borrower’s EITC. But perhaps more importantly, it’s counter-intuitive, they say.

“ The EITC supplements the income of low to moderate-income, working Americans with a certain amount of money each year based on their income and family size. ”

“It’s a program designed to lift people out of poverty and it’s actually a really effective tool to do that,” said Persis Yu, the director of the Student Loan Borrower Assistance Project at the National Consumer Law Center. “If you want people to repay their loans, it seems like you want them working and not in poverty.”

The EITC supplements the income of low to moderate-income, working Americans with a certain amount of money each year based on their income and family size. It is a component of the social safety net that members of both parties and economists generally agree works.

That’s because it very specifically targets low-income families and boosts their wages significantly, said David Neumark, the director of the Economic Self-Sufficiency Policy Research Institute at the University of California-Irvine.

What’s more, the money provides an incentive to work for people for whom the cost of work is normally pretty high — parents with modest incomes who may need to pay for child care. “There’s literally one paper I know of — and there are many papers on this topic — that fails to find evidence that the EITC boosts employment of low-skilled single moms,” said Neumark.

Americans who receive the credit, typically rely on it as a cushion for emergencies or to use for larger purchases they can’t afford throughout the year, Neumark said.

‘I haven’t been able to catch up on my bills’

That’s the case for Lisa Perry, a 48-year-old school bus driver, who said she was counting on her EITC and tax refund to help her make it through the lean times of the year when she’s not driving. But in February 2017 the government seized that money to pay off her student loans.

“It helps me with my rent, my electricity, gas bill, water and trash, insurance, car,” she said. “I stretch it all the way through.”

“ Lisa Perry, a 48-year-old school bus driver, said she was counting on her EITC and tax refund to help her make it through the lean times. But in February 2017 the government seized that money to pay off her student loans. ”

Perry said she ended up saddled with about $17,000 in student loans after pursuing a medical assisting program at a local campus of Everest College, part of the now-defunct Corinthian Colleges for-profit college chain. Corinthian filed for bankruptcy in 2015 amid reports the company enrolled students under false pretenses.

Perry believes she was victim to those tactics. She showed up at Everest in 2009 with hopes of getting a credential that would help her get a job to support her family. But Perry didn’t have a high school diploma, which made her ineligible to receive federal financial aid unless she passed a test proving she could benefit from the education offered at Everest. Perry says she failed the test once and passed it on the second try, thanks to help from the representative trying to enroll her.

Ultimately she signed up for classes and completed the nine months of required course work with much difficulty, but she was unable to secure the two-month internship necessary to complete her certificate. Now, because she’s losing money to pay off the debt, Perry is in some ways worse off than when she started school. Without her tax refund and EITC, she was unable to pay for the tags for her car and is in danger of losing it to her auto lender.

“I haven’t been able to catch up on my bills,” she said of losing the funds.

Many borrowers were misled by for-profit colleges

Perry’s story is similar to some of what Toby Merrill hears representing borrowers who have been misled by for-profit colleges as part of her work with the Project on Predatory Student Lending, a program at Harvard Law School that Merrill directs. Her clients often have their EITC seized over a student loan that Merrill argues the government doesn’t have a legal right to collect because they were made under fraudulent circumstances.

“The Department of Education frequently seizes Earned Income Tax Credits from definitionally low-income borrowers whose loans aren’t even enforceable,” she said.

“ In 2010, the now 63-year-old was able to enroll in a smog technician certificate program taught in English at a for-profit college, even though he primarily speaks Spanish, he said in an interview through a translator. ”

That may be the case for Luis Sanchez. In 2010, the now 63-year-old was able to enroll in a smog technician certificate program taught in English at a for-profit college, even though he primarily speaks Spanish, he said in an interview through a translator. Like Perry, he didn’t have a high school diploma and so the school gave him a test to see if he would benefit from the education. He failed the test twice and, on the third time, the school representatives gave him the answers.

He enrolled at the school for several months, but ultimately had to drop out with $11,000 in debt because he couldn’t keep up with the courses taught in English. Sanchez, who works as a cook at a local university and lives in Fullerton, Calif., couldn’t afford to pay off the loans. Eventually, his tax refund, including his EITC, was seized to pay off the debt. For the past three years he hasn’t even filed his taxes because he worries he’ll lose out on the funds.

For Sanchez, forfeiting those tax refunds has left him behind on rent and turning to his adult daughter for help. He says he’s angry that he spent so much to attend a school he believes lured him under false pretenses.

Lawmakers aren’t interested in helping

Though advocates and legal aid attorneys say they routinely hear from student-loan borrowers who suffer devastating consequences from losing out on their EITC, few policy makers seem interested in doing something to protect borrowers. Other than a 2009 recommendation by the Taxpayer Advocate to shield 15% of the EITC from offset, which Congress hasn’t acted on, there seems to be little interest, even as lawmakers have taken steps to safeguard other elements of the safety net from offset over defaulted student loans.

“ Borrowers who are experiencing extreme financial hardship can theoretically protect their EITC by appealing to the Department of Education. But advocates say that rarely happens in practice. ”

Senators have proposed stopping the government from collecting Social Security to pay student debt. Though those efforts haven’t gained much traction, Social Security income is still somewhat protected from being raided to pay off student loans — the government is required to leave borrowers with a minimum of $750 per month.

By contrast, none of the EITC is protected from the outset and borrowers often lose out on all of it when it’s taken to repay a defaulted student loan, advocates say. Borrowers who are experiencing extreme financial hardship can theoretically protect their EITC by appealing to the Department of Education. But advocates say that rarely happens in practice.

“We’ve submitted applications from borrowers who are homeless and the Department of Education said they were not experiencing extreme financial hardship,” Yu said.

The net result: Borrowers in poverty lose out on a benefit they rely on to stay afloat, making it difficult from them to get into a financial position where they can successfully repay their student loans.

“It’s beyond morally suspect,” Merrill said. “It’s unjustifiable to be collecting student loan debt in this way.”

This story was originally published on March 15, 2018.