When President Joe Biden announced a plan to forgive student loan debt, many borrowers who kept making payments during the pandemic wondered if they’d made the right choice. Borrowers who paid down their debt during a pandemic freeze that started in March 2020 can in fact get a refund — and then apply for forgiveness – but the process for doing that hasn’t always been clear. If you think you’re eligible, here’s what you need to know: WHO IS ELIGIBLE FOR A REFUND? Borrowers who hold eligible 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 applying 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 studentaid.gov account. For example, if a borrower paid $100 a month for 10 months of the pandemic and their balance is now $8,000, that $1,000 will automatically be refunded. Then they can apply to get the rest of their debt forgiven. But if a borrower paid throughout the pandemic and still owes $14,000, they won’t get an automatic refund. They can, however, apply to have $10,000 of that debt erased. Another group of people that has to apply for a refund is those who completely paid off their loan balance during the pandemic. If that’s you, you’re eligible for loan forgiveness, but you’ll have to request a refund prior to applying for debt relief. Borrowers should confirm their eligibility for the loan forgiveness program prior to requesting a refund. 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 apply for a $5,000 refund, then apply to have their debt forgiven. “Borrowers who paid off their loans during the pause will need to request a refund first, then request cancellation,” said a spokesperson from the Department of Education. The refund is not available for 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 non defaulted) —Federal Perkins Loans held by ED (defaulted and non defaulted) —Defaulted FFEL Program loans not held by ED —Defaulted HEAL loans If you are not sure which loan you have, visit your dashboard at studentaid.gov and find the “my loan servicers” section. If you can’t access your dashboard, you can call the Federal Student Aid office at 1-800-433-3243 to ask for loan servicer information. HOW CAN I APPLY FOR A REFUND? Borrowers who want a specific amount refunded can apply by calling their loan service provider. Right now, refunds are only being done via phone and not through any website or email. When the Biden Administration announced the forgiveness, loan servicers found themselves inundated with calls. But many borrowers now say they’re not waiting long when calling. “I was on hold for about five minutes,” said Megan McParland, of New Jersey, who graduated in 2018 and made several payments during the payment freeze. McParland requested a refund the first week of […]

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