You are delinquent on federal debt if you owe money to a U.S. government agency and have missed at least one scheduled payment. The debt usually falls into one of a few buckets: federal student loans from the Department of Education, unpaid taxes owed to the IRS, loans from agencies like the Small Business Administration, or overpayments from programs such as Social Security or VA benefits. The question matters because it appears on FHA mortgage applications, national security clearance forms, and other federal paperwork, and because the government has collection powers that private creditors do not.
What Counts as Federal Debt
Federal debt is money owed directly to a U.S. government agency. The common categories are:
- Federal student loans issued or guaranteed by the Department of Education, including Direct Subsidized, Direct Unsubsidized, and PLUS loans.
- Federal tax debt — unpaid income taxes, payroll taxes, or other liabilities owed to the IRS.
- Agency loans, such as those issued under the Small Business Administration’s 7(a) program.1U.S. Small Business Administration. 7(a) Loans
- Overpayments from federal programs — money you received but weren’t entitled to, such as overpaid Social Security or veterans’ benefits that the agency is now demanding back.
Debt to a private bank, credit card company, or medical provider is not federal debt, even if it’s in collections. A privately held student loan is not federal debt either. The distinction matters because the government’s collection toolkit only applies to money owed to the government itself.
How to Check Whether You Owe
If you aren’t sure, you can usually find out in an afternoon.
Tax Debt
Sign in to your IRS Online Account at irs.gov. Once you verify your identity, you can see your balance by tax year, your payment history, and your notices.2Internal Revenue Service. Online Account for Individuals You can also request an account transcript by mail, but each transcript covers only one tax year and may not reflect the latest penalties or interest.
Federal Student Loans
Log in to studentaid.gov to see your loan amounts, outstanding balances, servicer, and repayment status. If a loan is already in default, myeddebt.ed.gov covers your resolution options.3U.S. Department of Education. Debt Resolution – Federal Student Aid
Credit Reports
Your reports from Equifax, Experian, and TransUnion may show delinquent federal debts, including student loans and tax liens. You’re entitled to a free report from each bureau every 12 months.4USAGov. Learn About Your Credit Report and How to Get a Copy Not all federal debts appear on credit reports, though, and there’s a lag. Federal student loan servicers generally don’t report a loan as delinquent until it’s at least 90 days past due.5Nelnet. Credit Reporting A clean credit report is not proof that you don’t owe anyone in Washington.
When a Missed Payment Becomes Delinquent — and When It Becomes Default
Technically, you’re delinquent the day after you miss a scheduled payment. In practice, consequences escalate in stages.
Federal student loans run on a long clock. You’re delinquent the day after a missed payment, but the servicer waits 90 days before reporting to the credit bureaus.5Nelnet. Credit Reporting At 270 days without a payment, the loan moves into default, which is a separate and more serious status that opens the door to administrative garnishment and other collection action.
IRS tax debt starts the clock when you file a return showing a balance due or when the IRS assesses additional tax. You get a bill. If you ignore it, the IRS sends a series of notices with increasing urgency before moving to liens and levies.6Internal Revenue Service. Topic No. 201, The Collection Process
Why the Answer Matters: Forms That Ask
Two forms in particular make this question consequential.
FHA-insured mortgages. HUD’s Single Family Housing Policy Handbook makes borrowers with delinquent federal tax debt ineligible. To regain eligibility, you have to enter a repayment agreement with the agency you owe and make at least three months of on-time payments; prepaying those months doesn’t count.7HUD Office of Inspector General. FHA Loans to Delinquent Federal Tax Debtors Reverse mortgages follow the same rule for any delinquent federal debt. More broadly, OMB Circular A-129 requires federal agencies to check for delinquent federal debt before issuing loans, loan guarantees, or insurance, which affects SBA loans and federal student aid as well.
The SF-86, the questionnaire for national security positions, asks flatly whether you are currently delinquent on any federal debt. Financial issues are reviewed under Guideline F of the National Security Adjudicative Guidelines. A single old medical bill is rarely disqualifying; a pattern of unresolved debts, multiple collections, or ongoing delinquency raises questions about judgment and about vulnerability to coercion. Lying is worse than owing: knowingly falsifying the SF-86 is a federal felony punishable by up to five years in prison.8U.S. Office of Personnel Management. Standard Form 86 – Questionnaire for National Security Positions
What the Government Can Do to Collect
A private creditor usually needs a court judgment before touching your paycheck. Federal agencies don’t.
Treasury Offset Program
Through the Treasury Offset Program, the government can intercept federal payments owed to you and redirect them to your debt. That includes tax refunds, Social Security benefits, federal salaries, and federal retirement annuities.9Internal Revenue Service. Reduced Refund For overdue federal taxes, the IRS can levy up to 15% of each Social Security payment.10Social Security Administration. Can My Social Security Benefits Be Garnished or Levied? Before any offset, the agency must notify you and give you at least 60 days to dispute the debt.11Office of the Law Revision Counsel. 31 USC 3720A – Reduction of Tax Refund by Amount of Debt
Wage Garnishment
For defaulted federal student loans, the Department of Education can garnish up to 15% of your disposable earnings administratively, with no lawsuit required.12U.S. Department of Labor. Fact Sheet 30 – Wage Garnishment Protections of the Consumer Credit Protection Act The IRS can go further, seizing wages, bank accounts, and other property after sending required notices.
Federal Tax Liens and Levies
If you owe the IRS and don’t pay, it can file a Notice of Federal Tax Lien, a public record that attaches to everything you own — real estate, vehicles, bank accounts, business assets — and to anything you acquire while it’s in place. A lien secures the government’s interest. A levy actually takes the property. The IRS can seize and sell real estate, cars, and other assets to satisfy the debt.13Internal Revenue Service. Understanding a Federal Tax Lien
Passport Denial or Revocation
If you owe more than $66,000 in seriously delinquent tax debt (a threshold adjusted annually for inflation), the IRS can certify your debt to the State Department, which will deny your passport application or revoke the passport you already have.14Internal Revenue Service. Revocation or Denial of Passport in Cases of Certain Unpaid Taxes Seriously delinquent debt includes assessed tax, penalties, and interest that are legally enforceable. You can head off certification by entering a payment plan, submitting an Offer in Compromise, or having your account placed in Currently Not Collectible status.
How Tax Debt Grows While You Wait
Unpaid tax debt compounds faster than most people expect. The failure-to-pay penalty is 0.5% of your unpaid tax for each month or partial month the balance stays outstanding, capped at 25%. If you’ve set up an approved installment agreement and filed your return on time, the rate drops to 0.25% per month. If the IRS sends you a notice of intent to levy and you don’t pay within 10 days, the rate jumps to 1% per month.15Internal Revenue Service. Failure to Pay Penalty
Interest runs on top of that, compounded daily. For the first quarter of 2026, the individual underpayment rate is 7% per year.16Internal Revenue Service. Interest Rates Remain the Same for the First Quarter of 2026 Starting in the second quarter of 2026, the rate drops to 6%.17Internal Revenue Service. Internal Revenue Bulletin 2026-8 A $10,000 tax debt can easily grow by more than $1,000 in the first year if you make no payments.
Fixing Delinquent Tax Debt
The IRS offers several resolution paths. Which fits depends on what you owe, what you can pay, and whether your finances are likely to change.
Installment Agreements
An installment agreement lets you pay monthly. If you owe $50,000 or less, you can usually get a streamlined agreement without submitting detailed financial statements, as long as you pay the balance within 72 months and before the collection statute expires.18Taxpayer Advocate Service. Installment Agreements If you can’t finish in six years, you may get up to a seventh. Once the plan is approved, the failure-to-pay penalty rate drops from 0.5% to 0.25% per month.15Internal Revenue Service. Failure to Pay Penalty If you owe less than $100,000 in combined tax, penalties, and interest, you may also qualify for a short-term payment plan of up to 180 days without a formal installment agreement.6Internal Revenue Service. Topic No. 201, The Collection Process
Offer in Compromise
An Offer in Compromise lets you settle for less than you owe. The IRS weighs your income, expenses, asset equity, and ability to pay. You must have filed all required returns and made all estimated tax payments for the current year. The application fee is $205, and you must send an initial payment with the application — 20% of the offer for a lump sum, or the first installment for a periodic plan.19Internal Revenue Service. Offer in Compromise If you meet low-income certification guidelines, the fee and initial payment are waived. Most OIC applications are rejected, so it works best when you genuinely can’t pay the full amount within the remaining collection period.
Currently Not Collectible Status
If you can’t afford to pay anything, the IRS can mark your account Currently Not Collectible. That pauses levies and garnishments. The debt doesn’t disappear: penalties and interest keep running, the IRS periodically reviews your finances, and it may still file a federal tax lien to protect its claim.20Internal Revenue Service. Temporarily Delay the Collection Process You’ll need to file a Collection Information Statement (Form 433-F or 433-A) with proof of your financial situation.
Fixing Delinquent Federal Student Loans
If you’ve missed payments but haven’t hit 270 days, you have more leverage than you’ll have afterward. Call your servicer first.
Income-Driven Repayment
Income-driven repayment plans set your monthly payment based on income and family size. Options include Income-Based Repayment, Pay As You Earn, and Income-Contingent Repayment.21Federal Student Aid. Income-Driven Repayment Plans If your income is low enough, the payment can be $0. These plans also lead to forgiveness after 20 or 25 years of qualifying payments, depending on the plan.
Getting Out of Default
If your loans have already defaulted, two main paths exist:
- Loan rehabilitation. You make nine affordable monthly payments over a 10-month period, with the amount based on your income. Once you finish, the default notation comes off your credit report. You can only rehabilitate a loan once.22Federal Student Aid. Getting Out of Default
- Loan consolidation. You combine your defaulted loans into a new Direct Consolidation Loan. This is faster than rehabilitation, but the record of the original default stays on your credit report. You’ll have to either agree to an income-driven repayment plan or make three consecutive voluntary payments before consolidating.
The Department of Education’s Fresh Start program has offered temporary benefits for borrowers in default, including removal of the default from credit reports and restored access to federal student aid. Check studentaid.gov for current availability and deadlines.23Federal Student Aid. A Fresh Start for Federal Student Loan Borrowers in Default
The 10-Year IRS Collection Clock (and Why Student Loans Don’t Have One)
The IRS has 10 years from the date your tax is assessed to collect, a deadline called the Collection Statute Expiration Date.24Internal Revenue Service. Time IRS Can Collect Tax After the CSED, the IRS can no longer collect the tax or the associated penalties and interest.
Several common actions pause that clock. Requesting an installment agreement suspends it while the IRS reviews the request. Filing an Offer in Compromise does the same. Filing bankruptcy freezes it for the duration of the case plus six months. Requesting innocent spouse relief or a Collection Due Process hearing can suspend it too.24Internal Revenue Service. Time IRS Can Collect Tax The effective collection period often runs well past 10 calendar years.
Federal student loans don’t work this way. There is generally no statute of limitations on collection, so the government can pursue defaulted student loan debt indefinitely. That’s a strong reason to deal with student loan delinquency as soon as you discover it, not after.