Borrowers who paid off their remaining federal student loan balances during the coronavirus pandemic may be disappointed that they missed President Joe Biden’s recently announced widespread forgiveness initiative.
But according to the U. S. If they request a refund, Department of Education, those borrowers can still receive benefits.
Biden announced in August that his administration would forgive federal borrowers’ student loan debt of between $10,000 and $20,000 if they met certain income requirements. The vast majority of federal borrowers will experience some sort of relief, with about one-third of them expected to have their balances completely cancelled.
However, those who have already paid off their debt have criticized the effort as being unfair. One possible solution is for those borrowers, who paid off their debt during the pandemic payment pause, to ask their servicers for a refund right away and then submit an application for cancellation when the online form is made available in early October.
Given that the majority of borrowers with federal loans made no payments at all during the pandemic pause, let alone paid off their balance in full, it is unclear how many borrowers would actually benefit from the refund. However, those who later regret it might be able to get a refund and take advantage of the one-time relief.
Refunds for any payments made during the pause but before the consolidation are not available if you consolidated your loans after March 13, 2020.
Therefore, if you are qualified for $10,000 in forgiveness and you had $12,000 in federal loans and paid off $3,000 during the payment pause, you will receive $1,000 back.
They can also call and ask for a refund right away, or they can wait for the Education Department to do so on its own. On the day Biden announced the on-time student loan relief, Kaitlyn Koterbski, a Fortune reporter, took just a few minutes to call her servicer and ask for a refund.
The servicers say it could take weeks before she receives the money, but customers on Reddit claim that the refunded sums are already reflected in their current loan balances.
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SPRINGFIELD, Mo. (KY3) – President Biden’s Student Loan Relief Plan is sparking several questions from our viewers. This is one of them, “If you paid off your student loans during the pandemic, are you still eligible for student loan forgiveness?”
Update: The application for student loan debt relief is available. Apply for Federal Student Loan Debt Relief here.
President Joe Biden’s student loan forgiveness program will erase $10,000 of student debt for millions of Americans. That sum is even higher for recipients of federal Pell grants: $20,000 To qualify, your income must be below $125,000 a year. For households, the cap is $250,000.
It’s estimated that 40 million Americans could see reduced student loan debt. And millions of borrowers are eligible for automatic forgiveness because the Department of Education already has your income information. For everyone else, sometime in October, an application will be made available for student loan forgiveness.
We talked to Drury’s Executive Director of Financial Aid about what happens under the relief plan when you’ve paid off your student loan.
“You are eligible to request a refund if you made payments on or after March 13, 2020, when the pandemic officially started.” So, if you paid off your loans during the student loan pause and the 0% interest period during the pandemic because everything went to the principal at that time, you can request a refund of those payments, explained Ahrens.
“If you made any payments during that period to your federal student loans, you could get that refunded to you,” added CEO Peter Dunn of Your Money Line. “I also have to note that student loan forgiveness is not 100% going to happen. I mean, there is a slight chance that it gets caught up in the courts or, you know, it gets waylaid. That is a possibility. Right? So, there’s a one or 2% chance that this whole thing falls apart. But as of now, that window I detailed is the rule.”
Remember that March 13, 2020, is a significant date once more. According to Ahrens, you are not eligible for loan forgiveness if you paid off your student loans before the pandemic.
Ashley Reynolds of On Your Side responded to a number of queries and mentioned that you are not required to pay for student loan forgiveness if you have any additional inquiries. Don’t fall for a scam.
You can also always contact your loan servicer.
Returning to the original query, “Are you still eligible for student loan forgiveness if you paid off your debt during the pandemic?”
If you satisfy the aforementioned requirements, then the answer is yes.
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FAQ
Can you get student loan forgiveness if you paid it off?
You Qualify for the New Loan Forgiveness Program If you made payments and repaid your federal student loans during the payment freeze, or brought your balance down to less than the forgiveness amount, you can get a refund of your payments to make the most of this forgiveness opportunity.
What if I’ve already paid off my student loans?
You only need to get in touch with your loan servicer to ask for the refund, according to the Department of Education. By the middle of October, applications for loan forgiveness should be accessible.
What if I paid off my student loans before the pandemic?
While interest and payments have stopped since March 2020, some borrowers have continued to make payments to reduce their principal. According to the Federal Office of Student Aid, if you were one of them, you’re not out of luck: You can ask for a refund of any payments you’ve made on student loans since the forbearance started.
Can I get reimbursed for loans I paid off?
While borrowers who paid off their entire balance during the pandemic pause will need to ask their loan servicer for a refund, those who paid off part of their student debt during the pause may receive one automatically.