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

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

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

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

Who is entitled to a refund?

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

For some people, this refund is automatic. You can get a refund without filing an application if your payments 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 in their account.

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

But if a borrower paid up during the pandemic and still owes $14,000, they won’t get an automatic refund. However, you can request that this $10,000 debt be forgiven.

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Another group of people who need to apply for a refund are those who paid off their loan balances in full during the pandemic. If that’s you, you’re eligible for loan forgiveness, but you must apply for a refund before applying for debt forgiveness. Borrowers should confirm their eligibility for the loan forgiveness program before requesting a refund.

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For example, if a borrower owed $5,000 at the start of the pandemic and paid it all off during the freeze, but is eligible for up to $10,000 forbearance, they would request a $5,000 refund and then forbearance apply for his debts.

“Borrowers who repaid their loans during the hiatus must first request a refund and then a cancellation,” said an Education Department spokesman.

The repayment does not apply to private student loans.

Eligible federal student loans:

  • Direct loans (defaulted and non-defaulted)
  • Federal Family Education Loan (FFEL) program loans held by ED (defaulted and undefaulted)
  • Federal Perkins Loans held by ED (defaulted and undefaulted)
  • Defaulted FFEL program loans not held by ED
  • Defaulted HEAL loans

If you are unsure which loan you have, visit your dashboard at and locate the “My Loan Providers” section. If you cannot access your dashboard, you can call the Federal Student Aid Office at 1-800-433-3243 to request information about loan servicers.

How can I request a refund?

Borrowers who want a refund of a certain amount can request this by calling their loan servicer. Currently, refunds are only processed over the phone and not through a website or email.

When the Biden administration announced forgiveness, credit servicers were inundated with calls. But many borrowers now say they don’t wait long when they call.

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

McParland requested a refund in the first week of September. At first she felt that the service provider was trying to dissuade her from making the request. But after confirming she wanted to proceed, she was told she would see her refund in about a month.

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Sierra Tibbs, a 47-year-old resident of Casselberry, Fla., had a similar experience. The entire phone call with their credit service provider lasted about 20 minutes.

Tibbs requested a refund after seeing a video online informing her she could get a refund of money paid during the pandemic.

If you’re unsure who is servicing your loan, or if the service provider has changed during the pandemic, visit your student assistance account dashboard and scroll to “My Loan Service Providers” or call 1-800-433-3243.

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Before you call your credit provider to request your refund, you need to know your account number and the amount you want refunded.

Telephone numbers of the credit service providers:

How does the refund work – and when will my loans be forgiven?

If you request a refund, the amount you paid during the payment freeze will be added back to your student loan balance, said Katherine Welbeck, civil rights advisor for the Student Borrower Protection Center.

This amount is still subject to cancellation and can be deleted after you have applied for a waiver.

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

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

Laura Baum, a 30-year-old Chicago resident, paid $5,000 for her $15,000 outstanding balance during the payment freeze. She is eligible for a $20,000 cancellation because she was a Pell Fellow as an undergraduate. In early September, Baum called her loan servicer and asked for a refund.

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

“I’m going to keep this refund until I see absolutely $0 in my student loans,” Baum said.

When is the application deadline?

The deadline to request a refund is December 31, 2023. However, Welbeck recommends that you request a refund before requesting debt relief.

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

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

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

How much can I get reimbursed?

According to the Department of Education, you can refund the entire amount you paid during the payment freeze. However, you can choose a lower amount.

You can choose this option if you’ve paid off enough during the pandemic to bring your debt below the maximum forgiveness amount. You could get a partial refund and then request that your remaining debt be paid off.

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Let’s say you owed $15,000 when the freeze started, and you’ve paid $8,000 since then, but are eligible for $10,000 of debt forgiveness. You could 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 get my refund?

According to the Department of Education, borrowers should expect to receive their refund six to 12 weeks after they apply. But you might want to double check with your credit servicer.

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

Is the refund taxable income?

It is not yet clear whether the refunded money will count as taxable income. Welbeck recommends borrowers check with financial advisors in their own state.

Some states, like Indiana, have already announced that they will tax debt relief for people who have had their student loans called off. Policies vary from state to state.

Will the refund affect my credit score?

Because the Department of Education has not yet announced how cancellations or refunds will be reported to credit bureaus, it is uncertain whether these amounts will affect borrowers’ credit ratings, Welbeck said.

Should I start paying again after the payment block ends?

The pandemic payment freeze is scheduled to end on December 31st. If you haven’t seen debt relief by then, you’re expected to start making payments. Welbeck recommends borrowers sign up for income-based repayment plans before the end of the payment freeze.

Income-based 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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