After all, paying down the balance on a loan while interest is frozen is usually a good thing.
For others, their payments may be refunded.
While millions struggling with student debt rejoiced, many borrowers who paid all along were confused and dismayed.
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However, some of these borrowers are eligible for a refund on payments made since March 2020.
Heres how to tell if your student loans are eligible for a refund.
And some things to consider before you rush to maximizestudent loan forgivenessand put cash back in your pocket.
Can You Get a Refund on Student Loan Payments Made During the Pause?
However, only a tiny percentage of these borrowers opted to continue making payments during the pause.
This process is not automatic.
It is the borrowers responsibility to request a refund.
Who Qualifies for Student Loan Payment Refunds?
Borrowers eligible for refunds need to be aware of the following criteria.
If your loans werenteligible for the payment pause, odds are they arent eligible for forgiveness.
These stipulations mean that millions of borrowers are not currently eligible for student loan forgiveness.
The Biden administration is working to address that concern.
In the meantime, FFELP and other borrowers may be eligible toconsolidate their loansinto the federal direct loan program.
Once consolidated, those loans would become eligible for forbearance and student loan forgiveness.
When student loan forgiveness happens, the full $7,500 would be forgiven, instead of just $5,000.
What you do with the $2,500 windfall is up to you.
Should You Get a Refund on Your Student Loan Payments?
Now that you know how to get a refund, weve come to a critical question.
you’re able to ask for a refund but should you?
Its complicated, but there are a few scenarios where a refund doesnt make sense.
If your student loan debt remains significant even with forgiveness, those payments should stay right where they are.
This could be an unexpected tax bomb waiting for some Americans.
For some borrowers, a refund may just delay and complicate paying the piper down the road.
Kaz Weida is a senior writer for The Penny Hoarder.
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