A bill to amend title 11, United States Code, to provide that claims of governmental units arising from dischargeable educational loans shall have priority and that educational loans which are not dischargeable under chapter 7 of such title shall not be dischargeable under chapter 13 of such title, and to amend the Internal Revenue Code of 1954 to provide for the collection of defaulted Federal student loans from income tax refunds.

Amends the bankruptcy law to include among priority claims allowed, unsecured claims of governmental units for an educational loan made, insured, or guaranteed by such unit.

Excludes such loans from discharge after completion of the court confirmed plan.

Amends the Internal Revenue Code to provide an offset against overpayment of taxes for defaulted amounts on Federal student loans owed by an individual. Directs the Secretary of the Treasury to notify the Secretary of Education monthly as to the amounts recovered and to transfer such amounts as necessary to the governmental unit or fund to be repaid.