There is good news for the millions of people with federal student loans who paid off that debt during the Covid pandemic: Many of them will be eligible for a refund. CNBC reports: The U.S. Department of Education says many borrowers eligible for President Joe Biden’s student loan forgiveness plan who made payments on their debt during the pandemic billing freeze will receive automatic refunds. The assistance policy is valid from March 2020 and is due to expire on December 31. According to the government, more than 9 million people made at least one payment on their federal student loans between April 2020 and March 2022. The vast majority of borrowers defaulted by taking advantage of bill moratoriums and accrual of interest.
Payments made since March 2020 on federal student loans that are eligible for a pause must now be repaid, said higher education expert Mark Kantrowitz. The approximately 5 million student loan borrowers who held Federal Family Education Loans (FFEL) commercially were not eligible for a payment pause and will not be eligible for repayment. Any payments made before the pandemic also do not qualify, Kantrowitz said.
Not all borrowers need to file for repayment, said Elaine Rubin, senior associate and communications specialist at Edvisors. The repayment process will be automatic for borrowers who qualify for student loan forgiveness, as well as those who made voluntary payments during the pause that brought their balance below the maximum forgiveness amount of either $10,000 or $20,000, Rubin said. “They will be offered an automatic refund of the difference,” Rubin said. However, if you paid off your loan in full during the pandemic, you will need to take action and request a refund. Borrowers who have refinanced their federal loans will also need to see a student loan servicer, Kantrowitz said.