Federal student loan payments have been paused since the onset of the COVID-19 pandemic in March 2020. Interest rates are set to 0%, giving savvy borrowers the chance to make principal-only payments toward their student loan debt. About one in five federal student loan borrowers – including myself – seized the opportunity to reduce their loan balances during COVID-19 forbearance, according to a recent report from the Federal Reserve Bank of New York.
But circumstances changed during the 2020 presidential election, when then-candidate Joe Biden campaigned on federal student loan forgiveness. Biden was inaugurated in January 2021, and student loan borrowers were left with a choice: Should I count on my student loans being canceled, or should I keep paying down the principal balance?
A definitive answer came in August 2022 when the Biden administration announced it would cancel up to $10,000 worth of federal student loan debt for low- to middle-income borrowers and up to $20,000 for Pell Grant recipients. But by that time, some student debtors – again, myself included – had paid their loan balances down well below that amount.
In my case, I had reduced my federal student loan debt from $11,476 to $6,400 over the course of pandemic forbearance. So when I learned that I would qualify for $10,000 worth of student loan forgiveness, I had to wonder if I was simply out of luck for the $3,600 I overpaid, or if there’s any way I could get a refund for the difference. With the help of some fellow internet sleuths, I found the answer to my question on the Federal Student Aid website:
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Before I got too excited at the prospect of a federal student loan refund, I tempered my expectations. Past personal experience dictates that it can be difficult to deal with federal student loan servicers, especially since my loans were transferred to a new servicer in December 2021. Despite my hesitation, I was able to request my $3,600 refund in just a few hours – and here’s how you can, too:
1. Determine Whom to Contact
The directions for requesting a refund of student loan payments made during forbearance seem simple enough: Contact your current federal student loan loan servicer. You can find out who your servicer is by logging into your account dashboard on the FSA website.
2. Gather Information
Before calling your servicer, you’ll first want to arm yourself with some relevant information. Here’s what you’ll need:
- Your account number. If your loans were transferred to a new servicer during the pandemic, you’ll need the account number for both your former and current loan servicers.
- Payment details. Write down the payment amount and date for each payment you made from March 2020 to present. Since I paid down my debt through two separate servicers, I had to go through my bank accounts and personal records to find my detailed payment information – you may need to do the same.
- Your refund amount. Subtract your current loan balance from either $10,000 or $20,000, depending on your circumstances. In my case, I should qualify for $10,000 in student loan forgiveness and my current loan balance is $6,400, so I requested $3,600 back. And remember, only student loan payments made during forbearance are eligible for a refund. You won’t be reimbursed for payments made before March 2020.
This should go without saying, but make sure you meet the eligibility criteria to qualify for student loan forgiveness before you go through the trouble of requesting a refund. Specifically, your individual income cannot exceed $125,000 (or $250,000 for married couples). If you made payments during the pandemic and your loan balance is above the forgiveness threshold of $10,000 or $20,000, you can potentially request a reimbursement – but you’ll still have to repay any balance above the forgiveness amount.
Plus, private student loans don’t qualify for federal student loan forgiveness.
3. Make the Call (and Wait on Hold)
When you reach out to your federal student loan servicer, take detailed notes of your conversation, such as the date and time of your call and the name of anyone you speak with. Ask the representative to issue you a refund for your payments until your loan balance reaches the anticipated forgiveness amount, either $10,000 or $20,000. And expect to wait on hold – it took me about 50 minutes to reach a representative at Aidvantage.
If you’ve been making payments to the same servicer throughout the pandemic, requesting a refund should be relatively straightforward. But if you’re like me and your loans were transferred to a new servicer during the payment pause, the process may be a bit more tricky. That’s because your current servicer may not have all the information about payments you made to your previous servicer.
In my case, I made payments to two servicers during forbearance: $3,576 to FedLoan Servicing (between March 2020 and November 2021) and $1,500 to Aidvantage (from December 2021 to present). Initially, my servicer could only find the $1,500 worth of payments I made to Aidvantage. We had to get a supervisor involved to locate my FedLoan payment history so I could request a refund for the entire $3,600 I was owed. All told, this process took about two hours.
4. Keep an Eye on Your Accounts
You’ll need to ask your loan servicer for specific details about your refund. The Aidvantage representative told me that I would be reimbursed in about eight to 10 weeks, depending on whether it goes through direct deposit or I am mailed a check. I called on Aug. 30, so it could be a while before I know definitively whether my request was successful.
You should also keep tabs on your student loan balance through your servicer’s online account portal, since your refund amount will be added back to your outstanding student loan debt. Because of this, you may notice your loan balance change before you receive your refund. Additionally, you might decide to reach out to your loan servicer if you don’t see any updates to your account within a month or so.
5. Apply for Forgiveness
Once you’ve received your refund and your loan balance is restored, you should be able to wipe out the remainder of your debt through federal student loan forgiveness. Applications are expected to open in early October. You can sign up for borrower updates on the U.S. Department of Education website to receive a notification when the application is live.
For me, the two hours I spent on the phone with my loan servicer were well worth the potential reward, allowing me to qualify for the full $10,000 worth of student debt cancellation. So if you’re motivated enough to maximize your student loan forgiveness potential, call your current loan servicer right away. And remember that a little kindness and patience will take you far.