Defaulted student loan in collections, will they take away my tax refund if i consolidate now?

They have thrown you an olive branch. They want you to "set up a repayment plan with them". They do not want to bury you. They just want you to set up a plan to address your debts. They want you to be able to survive so that you can pay off the loan and still move your life forward. You will probably have to give them some of your tax refund but that is better than having them take it all. You need to make up a viable budget. That is one where you spend less than you earn. That will allow you to pay off your debts and then you can build up the other facets your personal finances.