How to get a student loan refund if you paid during the pandemic?


NEW YORK (TBEN) — When President Joe Biden announced a plan to forgive student loan debt, many borrowers who continued to pay during the pandemic wondered if they had made the right choice.

Borrowers who paid off their debt during a pandemic freeze that began in March 2020 can in fact get a refund — and then ask for forgiveness — but the process for doing so hasn’t always been clear-cut.

If you think you qualify, here’s what you need to know:

Who is eligible for a refund?

Borrowers who have qualifying federal student loans and have made voluntary payments since March 13, 2020 can get a refund, according to the Department of Education.

For some people, that refund will be automatic. You can get a refund without filing if your payments have brought your loan balance below the maximum debt relief amount: $10,000 for all borrowers and $20,000 for Pell Grant recipients. Borrowers can check their balance on their account.

For example, if a borrower paid $100 per month during 10 months of the pandemic and their balance is now $8,000, that $1,000 will be automatically repaid. Then they can apply to have the rest of their debt forgiven.

But if a borrower paid during the pandemic and still owes $14,000, they won’t get an automatic refund. However, they can apply to clear $10,000 of that debt.

Another group of people who need to request a refund are those who have paid off their loan in full during the pandemic. If you are, you qualify for loan forgiveness, but you must request a repayment before applying for debt relief. Borrowers must confirm eligibility for the loan waiver program before applying for a repayment.

For example, if a borrower had $5,000 in debt at the start of the pandemic and paid it all back during the freeze, but is eligible for up to $10,000 in forgiveness, they would request a $5,000 refund and then apply for their loan. to get debt forgiven. .

“Borrowers who have paid off their loan during the break must first ask for repayment and then for cancellation,” said a spokesman for the Ministry of Education.

Repayment is not available for private student loans.

Eligible Federal Student Loans:

—Federal Family Education Loan (FFEL) Program Loans held by ED (in default and non-default)

—Federal Perkins Loans Held by ED (in default and non-default)

—Defaulted FFEL Program Loans Not Owned by ED

If you’re not sure what loan you have, go to your dashboard at and find the “my loan servicers” section. If you cannot access your dashboard, you can call the Federal Student Aid office at 1-800-433-3243 to request information about the loan administrator.

How can I request a refund?

Borrowers who want to repay a certain amount can apply by calling their loan service provider. At this time, refunds are only made over the phone and not through a website or email.

When the Biden administration announced the forgiveness, loan managers were inundated with phone calls. But many borrowers now say they don’t have to wait long when making a call.

“I was on hold for about five minutes,” said New Jersey’s Megan McParland, who graduated in 2018 and made several payments during the payment freeze.

McParland asked for a refund in the first week of September. At first, she felt that the administrator was trying to dissuade her from submitting the request. But after confirming that she wanted to move forward, she was told she would see her refund in about a month.

Sierra Tibbs, a 47-year-old resident of Casselberry, Florida, had a similar experience. The entire phone call with her loan manager took about 20 minutes.

Tibbs asked for a refund after seeing a video online telling her she could get back the money she paid during the pandemic.

If you are unsure who is handling your loan, or if the administrator has changed during the pandemic, go to your student aid account dashboard and browse “my loan administrators” or call 1-800-433-3243.

Before calling your lender to request your repayment, you need to know your account number and the amount you want to repay.

—Telephone numbers of credit managers:

FedLoan Service: 1-800-699-2908

Great Lakes Educational Loan Services, Inc.: 1-800-236-4300

Financial: 1-855-337-6884

Help: 1-800-722-1300

OSLA maintenance: 1-866-264-9762

Default Resolution Group: 1-800-621-3115 (1-877-825-9923 for the deaf or hard of hearing)

How does the repayment work – and when will my loans be waived?

That amount is still eligible for cancellation and can be eliminated after you request forgiveness.

You are eligible for debt relief if you individually had an annual federal income of less than $125,000 or $250,000 if you are married or head of household in 2020 or 2021. Application is expected to open in early October and you can apply until December 31 Submit. , 2023.

It is unclear when borrowers will see debt relief. So far, the plan only mentions that borrowers will be notified by their loan manager when their debt is forgiven. There is also a possibility that forgiveness could be delayed if the Biden administration faces legal challenges.

Laura Baum, a 30-year-old Chicago resident, paid $5,000 during the payment freeze on her $15,000 remaining debt. She is eligible for a $20,000 cancellation since she received a Pell scholarship when she was a student. In early September, Baum called her loan manager and asked for repayment.

But because of the uncertainty, she plans to save that money until the Ministry of Education confirms that her debt has been forgiven.

“I’m going to hold onto that repayment until I see absolutely $0 in my student loans,” Baum said.

When is the TBEN to apply?

The TBEN to apply for a refund is December 31, 2023. However, Welbeck recommends that you apply for a refund before applying for debt forgiveness.

“If you apply first, you can process the refund to get your money back, and then that balance in your account will be canceled,” Welbeck said.

The loan waiver application process is expected to take four to six weeks.

The Department of Education offers a subscription page where you can sign up to be notified when the application opens.

How much can I get back?

According to the Ministry of Education, you can get back the full amount you paid during the payment freeze. However, you can choose a lower amount.

Suppose you had $15,000 in debt at the beginning of the payment freeze and have since paid $8,000, but are eligible for $10,000 in debt relief. You can decide to ask for a refund of as little as $3,000. Then your debt balance is exactly $10,000 and you can apply for maximum loan forgiveness.

When will I receive my refund?

Borrowers should expect their repayment six to 12 weeks after their request, according to the Department of Education. But you may want to double check with your loan manager.

McParland’s loan manager told her she would see her repaid amount in 30 to 45 business days, but Baum was told it would take 60 to 70 business days for her money to be back in her bank account.

Is the refund taxable income?

It is not yet clear whether the refunded money qualifies as taxable income. Welbeck recommends that borrowers contact financial advisors in their own state.

Some states, such as Indiana, have already said they will tax debt relief for people whose student loans have been canceled. The policy varies from state to state.

Will the refund affect my credit score?

Since the Department of Education has not yet announced how the cancellation or refund will be reported to the credit bureaus, it is still uncertain whether these amounts will affect borrowers’ credit scores, Welbeck said.

Do I have to start paying again when the payment hold ends?

The pandemic freeze on payments ends on December 31. If you have not seen debt relief by then, you are still expected to start paying. Welbeck recommends that borrowers enroll in income-driven repayment plans before the payment freeze ends.

Income-driven repayment plans allow you to set an affordable payment amount based on income and family size.

More information about the four types of income-related repayment plans can be found here.

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