Some Borrowers Are Getting Their Pandemic Payments Refunded in Order to Maximize Loan Forgiveness

By Maria Carrasco, NASFAA Staff Reporter

After President Joe Biden announced his plan for student loan cancellation last week, one of the first questions that started to surface was: What about borrowers who have already paid off their student loans? 

As it turns out, those borrowers who made payments on their federal student loans during the pandemic-related repayment pause can request a refund and potentially get more of their debt forgiven — and many have already started doing so.

On Wednesday, days before the student loan repayment pause was set to expire, Biden announced that he is canceling $10,000 in student loan debt for millions of borrowers who make less than $125,000, or households earning less than $250,000. Borrowers who fall under the income caps and who received Pell Grants in college will receive $20,000 in forgiveness.

ED later posted on Friday that applications to get the loan forgiveness would be available in early October, and that borrowers could expect relief within four to six weeks after they submit their application. ED is recommending that borrowers submit an application before November 15 in order to receive relief before the payment pause ends on Dec. 31, 2022. 

According to an ED spokesperson, borrowers can still request refunds for any federal student loan payments made since March 13, 2020, when the first repayment pause was announced. Additionally, any amount paid after Aug. 24, 2022, that brings an eligible borrower below the $10,000 or $20,000 threshold will automatically be refunded without the borrower requesting it.

The ED spokesperson noted that refunded payments will increase borrowers’ loan balances and in order to receive loan cancellation under Biden’s executive order, borrowers must meet the income criteria and have eligible loans.

That means eligible borrowers who paid off all or part of their federal student loans since March 13, 2020, will still qualify for Biden’s student loan forgiveness. Borrowers can request a refund by calling their loan servicer directly, according to the Federal Student Aid website.

Betsy Mayotte, president and founder of the Institute of Student Loan Advisors, told NASFAA that considering Biden extended the pause on student loan repayments, she doesn’t see any risk with borrowers asking for a refund of their pandemic payments. She noted if Biden’s executive order gets challenged in court and ultimately struck down or delayed, borrowers could still repay their loans with the funds they get back. 

On Twitter, Adam Kelsey, who works for Facebook News, went viral after reminding borrowers that they could still request a refund. He even started a Twitter thread of borrowers who said they were successful in getting their pandemic payments refunded from their servicers.

However, the vast majority of federal student loan borrowers have left their balances untouched since March 2020, with only 10.3% of borrowers with decreasing balances since the initial implementation of the repayment pause and interest accrual, according to an update published in mid-August from the Federal Reserve Bank of New York.  


Publication Date: 8/30/2022

Nedi G | 8/30/2022 6:30:09 PM

She noted if Biden’s executive order gets challenged in court and ultimately struck down or delayed, borrowers could still repay their loans with the funds they get back.

Some shoud inform Mayotte this was not done through a presidential executive order but via the HERO's act provision which expanded the powers of the Education Secretary and can not be overturned. Same power that froze interest and student loan payments.

Scott J | 8/30/2022 11:16:51 AM

This is called buying votes. It could of been handled much differently by focusing directly to people in more dire need. Not all students needed to be forgiven of their loans and could of gone through other resources, such as the income based payment plan.

Mike B | 8/30/2022 9:45:12 AM

"She (Mayotte) noted if Biden’s executive order gets challenged in court and ultimately struck down or delayed, borrowers could still repay their loans with the funds they get back. "

Are the students doing this going to realize this? I feel like this is going to set some folks up for a very bad situation. In my opinion, there is a very good chance this will get struck down in the courts.

James C | 8/30/2022 8:24:27 AM

I am still unclear how up to 35 million applications will be processed in 4 to 6 weeks. Are they not verifying income?

You must be logged in to comment on this page.

Comments Disclaimer: NASFAA welcomes and encourages readers to comment and engage in respectful conversation about the content posted here. We value thoughtful, polite, and concise comments that reflect a variety of views. Comments are not moderated by NASFAA but are reviewed periodically by staff. Users should not expect real-time responses from NASFAA. To learn more, please view NASFAA’s complete Comments Policy.

Related Content

Amid Legal Challenges ED Pledges to Continue Implementing SAVE Plan to the ‘Fullest Extent Possible’


Today's News for July 18, 2024


View Desktop Version