Student borrowers seek repayment of payments made during break
Borrowers began inquiring about repayments after President Biden said he would forgive up to $10,000 in federal student loan debt and up to $20,000 for Pell Grant recipients, for people who earn less than $125,000 per year, or less than $250,000 for married couples. Among the questions: What if they repaid their loans during the pandemic? Would they still be entitled to a cancellation? How would that even work?
Like this: Say you paid off your $8,000 loan balance during the pandemic. You can request a refund of that money and then request debt relief to clear the ledger. This way you keep your $8,000 and your loans are still forgiven. That is if you meet the eligibility criteria.
Who is eligible for the new $10,000 Student Debt Cancellation Plan?
While most of the nearly 42 million people covered by the pause have not made payments since its inception, around 9 million borrowers in good standing have continued to send money, according to the Department for Education. . Borrowers have one year to request a refund. The agency confirmed that eligible people who have paid off some or all of their debt in the past two and a half years could still qualify for forgiveness if they meet the income threshold.
However, nothing on the Department of Education’s website says as much, which should give borrowers pause, said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group representing businesses that service loans. student loan payments.
There is no guidance on the Department for Education’s website ‘as to how refunds will work in relation to forgiveness. And given that the government is still building this plane after it’s already taken off, I think it’s best to wait for official guidelines,” he said. Buchanan said his members have recently received “a ton” of refund requests. Several student loan managers put the number in the tens of thousands.
Calculate the amount of your student loan that could be canceled
“The sudden resurgence of interest in these repayments is partly because people have come back to believing in the student loan system,” said Michael Pierce, executive director of the Student Borrower Protection Center. He said the nonprofit spoke with borrowers early in the pandemic who tried to submit written requests for a refund and were ignored. “I would hate to see repairman capacity issues mock anyone who tells people they can trust this,” Pierce said.
Some payments made during the freeze were involuntary, with the department continuing to garnish wages from defaulting borrowers early in the pandemic. Some borrowers, especially those working to cancel civil service loans, have continued to pay out of suspicion.
Others, like Gray and Lauren Cole, saw an opportunity to get rid of debt without paying interest. The Gainesville, Georgia couple spent 2020 and 2021 paying off $40,000 in student loans Gray acquired while studying kinesiology and ministry at Mississippi College.
“We were lucky to be able to work, even while we were in lockdown during covid,” said user experience designer Lauren Cole, 32. “We had already worked hard to pay off our debts and we remained committed.” When she learned of Biden’s cancellation plan, Lauren said she was happy for her friends who would benefit but certainly didn’t think she would be among them.
That changed after spotting a tweet from the Student Loan Protection Center encouraging people who made payments during the break to request a refund. The nonprofit, which has advocated for debt forgiveness, has asked borrowers to seek repayment before applying for forgiveness.
Last Friday the Coles called Gray’s repairman who said it would take 6 to 12 weeks to process the request and repay $10,000 of the money they paid for his debt. “It was a little shocking at first, especially how easy it was,” said Gray, an Army chaplain. “The woman just opened the account and said, ‘You are now cleared to collect the $10,000. We will just try to pay it the best with our community. »