What is a Treasury Offset (TOP)?
Under this Treasury Offset Program, the Financial Management Service, a bureau of the US Department of Treasury will offset Federal and/or State payments if a borrower fails to pay their obligation. While the most common type of Federal payment offset is Federal income tax refunds, several other types, including social security benefit payments, are also eligible for full or partial offset. In other words, if a borrower has an outstanding debt and they have incoming social security benefits, this too can be subjected to the offset. In addition to defaulted debts held by ED, defaulted loans held by guaranty agencies are also included in the process. Mr. Kay’s Notes: With the TOP program the seized amount is considered an involuntary payment meaning the amount will be applied to the balance but will not count towards any voluntarily payment arrangement. With a treasury offset 80% of the seized amount will be forwarded to the interest and the other 20% will go towards the collection fees.
