Can federal student loan refunds be levied?
There is a risk that your funds will be seized and garnished even if they are otherwise exempt from creditor process if they are placed in a bank account. The Virginia Supreme Court has held that funds deposited in a general bank account and co-mingled with non-exempt funds become non-exempt, even if they would have been exempt before. Therefore, if you place your check in your existing bank account, there is a risk of garnishment. Further, even if you are able to prevail on a demand or lawsuit to return wrongfully-garnished funds, you have to consider how long you will be without access to that money, and the costs involved in having it returned.
I would recommend that you open a new bank account, specifically advising the bank that only exempt funds will be deposited therein. This should avoid the problem of creditors levying on the account altogether, and will put you in a much better position if it happens anyway.