Student Loan Payment Refunds Will Be Automatic for Many

The Education Department says refunds of student loan payments made during the pandemic will be automatic for many.
Sep 23, 2022

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Hundreds of thousands of borrowers made payments on federal student loans after forbearance began on March 13, 2020, in hope of paying off debt more quickly. But now that the White House has announced plans to cancel up to $20,000 in student loan debt, some of those borrowers may be wondering how to get a refund.

Some may have paid their loan balances down below the amount of cancellation they qualify for, for example, and want to maximize the amount discharged.

On Sept. 13, the Education Department said a refund of the overpayment would be automatic for anyone who paid down their debt below the cancellation amount they qualify for. That is, if you qualify for $10,000 in cancellation but paid the balance down to $8,000 during the pandemic, your balance of $8,000 would be discharged and the remaining $2,000 would be refunded.

Of course, you have to successfully apply for debt cancellation first. While that process will be automatic for many borrowers, others have to wait until an online application opens sometime in October.

Other borrowers, who have a balance remaining even after the $10,000 or $20,000 debt cancellation, still can receive refunds on voluntary payments made after March 13, 2020, by contacting their servicer. It's important to note that these refunded payments will increase your loan balance and your monthly payments. If you expect to have a balance after discharge is applied and wish to request a refund, you can do so by contacting your servicer until Dec. 31, 2023.

Here’s what you need to know if you're likely to have a balance remaining but still want to ask for a refund.

Who can request a refund?

More than 40 million borrowers were allowed to pause their payments, interest-free, during the pandemic. The White House says up to 27 million people may be eligible for debt cancellation. The maximum amount discharged is $10,000 per borrower, $20,000 if you received a Pell Grant at any point in the past.

Those who made payments or paid off their federally held loans during the interest-free forbearance — by single payment or lump sum — may be eligible for refunds. Payments made since March 13, 2020, are eligible. Refund requests can be made only by you and refunded to you, even if someone else made a payment on your loan.

If you consolidated your loans after March 13, 2020, any payments you made prior to consolidation aren't eligible for a refund.

Private student loan payments aren't included. Neither are payments made on some FFELP or Perkins loans.

How do I request a refund?

Starting the process for getting a refund on payments is relatively simple if you have the right information handy. You need:

  • Your loan servicer’s phone number.

  • Your Social Security number.

  • Payment confirmation numbers or bank payment information.

  • The address where you want your refund delivered.

You can likely find payment confirmation numbers on your loan servicer account portal under your payment history. Each payment has a unique identification number that will allow the servicer representative to apply your refund accurately. You can find your bank transaction dates or check numbers on your bank account portal.

The first step is to call your loan servicer. Your loan servicer representative could ask for your Social Security number to pull up your account. After they verify your account and identity, let them know you want to request a refund on payments made during the interest-free forbearance period.

Expect long hold times, says Scott Buchanan, executive director of the Student Loan Servicing Alliance.

The representative will ask you which payments, specifically, you want refunded. To make this go quickly and smoothly, be prepared to provide them with the applicable payment confirmation numbers or transaction numbers.

You will also need to confirm your address on file: Refunds could come via check or electronically.

Then, the representative will submit the request on your behalf and provide you with a confirmation.

When will I get my money back?

If you don’t get your refund electronically, you will receive a check in six to 12 weeks. You will also see your loan balance increase by your refunded amount in that time frame.

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