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In June 2023, the Supreme Court struck down the Biden administration’s plan to cancel up to $10,000 in student loans for qualifying borrowers, and up to $20,000 for Pell Grant recipients. This pivot away from Biden’s forgiveness plan might have put a kink into the repayment strategy of millions of Americans who received a student loan refund during the pandemic payment pause.
Here’s what’s happening with student loan refunds, and what to do if you received a reimbursem*nt.
Why did some borrowers get a refund?
During the COVID-19 payment pause, eligible federal student loan borrowers were not required to make their monthly payments. Borrowers who did make payments on federal loans between March 13, 2020, and Aug. 28, 2023, were eligible for a refund on any payments made during this time frame. Student loan refunds were not sent to all borrowers automatically, but qualifying borrowers could request a refund through their loan servicer.
You may have asked for a student loan refund for various reasons, including:
- You needed additional cash flow for other essential expenses
- You werepursuing loan forgiveness and hoped that a larger portion of your remaining balance would be forgiven
- You may have wanted to bring your loan balance back up to the maximum amount you would’ve qualified for if Biden’s student loan relief plan passed.
Good to know:
The U.S. Department of Education's refund program ended on Aug. 28, 2023. If you didn’t request a student loan refund before this date, you’ve missed your window.
Do I have to pay back my refund?
If you received a student loan refund, you’re now responsible for paying it back. Since Biden’s forgiveness plan is off the table for now, any amount that was refunded to you was added back to your unpaid loan balance. Additionally, this higher principal balance has beenaccruing interest since the 0% interest program ended in September 2023.
If you’re unsure how much you still owe on your federal student loans, reach out to your loan servicer immediately. Your servicer’s contact information is located on your monthly student loan billing statement. You can also find your servicer through yourStudentAid.gov account.
Keep in mind, you may have a different servicer now than pre-pandemic, as many borrowers were reassigned since the end of the pandemic payment pause. Once you know how much to repay, you can decide how best to return the funds. Options could include:
- Make a lump-sum payment: If you haven’t spent your student loan refund yet, you can apply it toward your principal balance in a lump-sum payment. This one-time payment can have a big impact on your student debt as a whole. Not only does it dramatically lower your principal balance in one fell swoop, you’ll save money on interest charges, too.
- Explore an income-driven repayment plan (IDR):Income-driven repayment plans can be an effective way to reduce your monthly payment, sometimes to as little as $0 per month. There are four IDR plan options, all of which use your income and family size to calculate your monthly payment amount. Repayment terms are 10 to 25 years, after which your unpaid balance is forgiven.
How to get a refund if you overpaid
A one-time payment count account adjustment is in effect for borrowers repaying their loans via an income-driven repayment (IDR) plan and borrowers pursuingPublic Service Loan Forgiveness (PSLF).
This adjustment updates your payment count to include credit for certain periods previously not counted towards forgiveness. For example, it accounts for the three years of mandatory administrativeforbearance during the pandemic. Plus, it corrects issues where borrowers received fewer payment credits than they actually made, whether due to being on the wrong payment plan or because of late or partial payments.
An estimated 3.6 million borrowers with Direct Loans will see their payment counts increased when these additional months are included in their payment count. This benefit could help some borrowers move the needle closer to loan forgiveness. The U.S. Department of Education expects it to be completed by July 1, 2024. After completion, some borrowers who made excess payments may qualify for forgiveness and receive a refund for their overpayments.
You may qualify for a student loan refund if:
- You had at least one Direct Loan or FFEL Program loan held by the U.S. Department of Education
- You were eligible for IDR forgiveness or PSLF
- You are eligible for an adjustment to the number of payments counted toward IDR or PSLF
- After this adjustment is made, you'll have more payments on your record than you needed to qualify for loan forgiveness.
Your payment count could be adjusted upward to count the following as payments that get you closer to forgiveness:
- Any months that your loan was in repayment status, regardless of what payment plan you were on, the type of loan you had, or the amount of your payment
- 12 months or more that your loan was in consecutive forbearance
- 36 months or more that your loan was in continuous forbearance
- Months your loan was in military or economic hardshipdeferment in 2013 or after
- Months your loan was deferred, except for in-school deferment, prior to 2013
- Months your loan was in repayment or in a qualifying deferment or forbearance prior to the time you consolidated your loans
How will I receive my refund?
If you made more payments than you needed to qualify for forgiveness you’ll receive a refund back to the most recent of three dates:
- The date you reached the required number of payments to qualify for forgiveness
- The date that the U.S. Department of Education acquired your loan
- The disbursem*nt date in the case of consolidation loans
The U.S. Department of Education is automatically reviewing accounts and applying payments. You will be notified by your loan servicer if your loans are forgiven and refunds will be sent using the same method by which you made your payments. If you sent checks, you will receive a check. If you sent an electronic payment, your refund will come electronically.
Good to know:
In most cases, processing your student loan refund takes a maximum of two months, although the timeline can differ.
Will student loans be forgiven in the future?
Although the Supreme Court blocked the Biden administration’s sweeping debt relief plan, there are still opportunities to have your loans forgiven.
For example, a new forgiveness benefit under the Saving on a Valuable Education (SAVE) repayment plan went into effect in February 2024. Previously, forgiveness under SAVE required 20 or 25 years of repayment, but this new benefit accelerates loan forgiveness for some borrowers.
With the new SAVE benefit, if your original loan balance was $12,000 or less, you’ll receive automatic loan forgiveness after making just 10 years of qualifying payments. If your original balance was more than $12,000, the finish line to forgiveness increases by one year for every $1,000 you owe. So if you originally borrowed $15,000, you’ll be eligible for loan forgiveness after 13 years.
The state of student loan forgiveness is continuously changing — at the very least, eligible borrowers can take advantage of this new SAVE benefit.
4.44.4
Fox Money rating
Fixed (APR)
4.84% - 8.44%
Loan Amounts
$10,000 up to total refinance amount
Min. Credit Score
680
Overview
Borrowers who graduated with at least a bachelor’s degree may refinance their student loans with ELFI. Every applicant is assigned a student loan advisor to help guide them through the process.
Students who wish to take over their parents’ PLUS loan may do so by refinancing with ELFI — something not offered by every lender — but spouses can’t consolidate their loans into a single refinancing loan.
Unfortunately, ELFI doesn’t allow borrowers to release cosigners, nor does it offer any rate discounts. However, borrowers who experience financial hardship may be eligible for up to 12 months of forbearance.
Interest rates
Fixed and variable
Minimum credit score
680
Minimum income
$35,000
Loan terms
5, 7, 10, 15, or 20 years for student loan refinancing; 5, 7, or 10 years for parent loan refinancing
Loan amounts
Minimum of $10,000 with no set maximum.
Cosigner release
None
Eligibility
Must be a U.S. citizen or permanent resident with a bachelor’s degree or higher. Must have at least $10,000 in student loans to refinance and a minimum credit history of 36 months.
4.64.6
Fox Money rating
Fixed (APR)
5.24% - 9.40%
Loan Amounts
$5,000 - $250,000
Min. Credit Score
680
Overview
Founded in 2009, LendKey partners with 300+ community banks and credit unions to connect borrowers with the loans they need. You can compare multiple lenders at once without affecting your credit score.
However, the exact terms and qualification requirements available through LendKey vary depending on your chosen community lender. While you can easily compare options, you’ll need to read the fine print of each offer to make sure the loan offers everything you need.
Interest rates
Fixed or variable
Minimum credit score
680
Minimum income
Does not disclose
Loan terms
5, 7, 10, or 15 years
Loan amounts
$5,000 to $250,000
Cosigner release
Varies based on lender's terms
Eligibility
Must be a U.S. citizen or permanent resident and have already graduated with at least an associate degree from one of LendKey lenders’ eligible institutions.
4.74.7
Fox Money rating
Fixed (APR)
5.89% - 10.99%
Loan Amounts
$10,000 - $750,000
Min. Credit Score
Does not disclose
Overview
Citizens offers student loan refinancing to qualifying borrowers who refinance at least $10,000 in student loan debt.
Undergraduate borrowers can refinance up to $300,000 in student loans, while those who borrowed for graduate or professional degrees have higher limits of $500,000 or $750,000. Citizens offers fixed and variable rates and repayment terms between five and 20 years.
If you’re a medical resident, you can refinance your student loans and only pay $100 per month for up to four years while completing your residency or fellowship.
Interest rates
Fixed or variable
Minimum credit score
Does not disclose
Minimum income
Does not disclose
Loan terms
5, 7, 10, 15, or 20 years
Loan amounts
$10,000 minimum, with a maximum of $300,000 for bachelor’s degree or below; $500,000 for graduate degrees; and $750,000 for professional degrees
Cosigner release
36 months
Eligibility
Must refinance at least $10,000 in student loans and be a U.S. citizen, permanent resident, or resident alien with a valid U.S. Social Security number. Must have earned at least a bachelor's degree to qualify.
3.83.8
Fox Money rating
Fixed (APR)
6.00% - 10.37%
Loan Amounts
$7,500 - $200,000
Overview
EdvestinU is a loan program offered by Granite Edvance Corporation and offers affordable rates for refinance loans. Borrowers can refinance federal and private loans, and fixed and variable rate loans are available.
EdvestinU refinance loans are available to residents of about 20 states, and the lender has higher loan minimums and lower maximums than some competitors. Both of these factors limit who can (or might want to) refinance with this lender, but eligible borrowers do have various student loan repayment term options.
Interest rates
Fixed or variable
Minimum credit score
700
Minimum income
Does not disclose
Loan terms
5, 10, 15, or 20 years
Loan amounts
$7,500 to $200,000
Cosigner release
24 months
Eligibility
U.S. citizens or permanent residents who are at least 18 years old and reside in Alaska, Arkansas, Colorado, Connecticut, Florida, Maine, Massachusetts, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Puerto Rico, Rhode Island, Texas, Utah, Virginia, Washington, West Virginia, and Wisconsin.
3.93.9
Fox Money rating
Fixed (APR)
6.15% - 10.14%
Loan Amounts
$5,000 - $250,000
Min. Credit Score
670
Overview
INvestEd is an Indiana-based nonprofit lender that provides refinanced student loans nationwide. As a nonprofit, INvestEd offers competitive rates as well as an autopay discount. Cosigner release is also available after 12 on-time payments, which is less than many competitors.
However, the maximum refinance limit of $250,000 is below what other lenders may allow. Borrowers must also comply with strict credit and income requirements to qualify, or must have an eligible cosigner. While credit requirements are clearly defined, there’s no way to prequalify with a soft credit check.
Interest rates
Fixed or variable
Minimum credit score
670
Minimum income
Does not disclose
Loan terms
5, 10, 15, or 20 years
Loan amounts
$5,000 to $250,000
Cosigner release
12 months
Eligibility
U.S. citizens or permanent residents are eligible. Borrowers must meet minimum requirements including a FICO score of 670 or higher, annual income of $36,000, a debt-to-income ratio below 40% to 50%, a year of continuous employment, and no defaults or serious collection activities in recent years.
44
Fox Money rating
Fixed (APR)
6.20% - 8.99%
Loan Amounts
$10,000 up to the total amount
Min. Credit Score
670
Overview
Massachusetts Educational Financing Authority (MEFA) offers refinancing loans to student borrowers — and unlike many other lenders, you don’t need to have earned your degree to qualify. Only fixed-rate loans are available, but the rates are competitive and may be lower than what other lenders can offer. MEFA also doesn’t charge any fees or penalties.
Refinance loans start at $10,000, and you must have made six consecutive on-time payments on the original loans over the most recent six months. If you can’t qualify based on your own credit history, you can add a cosigner.
Interest rates
Fixed
Minimum credit score
670
Minimum income
Does not disclose
Loan terms
7, 10, or 15 years
Loan amounts
$10,000 up to your total debt
Cosigner release
None
Eligibility
Must be a U.S. citizen or permanent resident who is the primary borrower on education debt used to attend an eligible college or university. Must have made six on-time loan payments over the most recent six months. Must have no history of default or delinquency on education debt for the past 12 months and no history of bankruptcy or foreclosure in the past five years.
3.73.7
Fox Money rating
Fixed (APR)
6.34% - 8.54%
Loan Amounts
$7,500 - $250,000
Min. Credit Score
680
Overview
Founded in 1981, Rhode Island Student Loan Authority (RISLA) is a nonprofit lender that offers refinance loans to borrowers in all 50 states. Though most private lenders require borrowers to have graduated to qualify for refinancing, RISLA also serves borrowers who didn’t complete their degree.
RISLA offers income-based repayment to borrowers in financial distress. Additionally, borrowers may also access up to 24 months of forbearance in the event of financial hardship. Borrowers who return to graduate school may defer repayment on their refinancing loans for up to 36 months.
Interest rates
Fixed
Minimum credit score
680
Minimum income
$40,000
Loan terms
5, 10, or 15 years
Loan amounts
$7,500 minimum up to of $250,000, depending on degree
Cosigner release
None
Eligibility
Borrower or cosigner must meet credit requirements. Student must be a U.S. citizen or permanent resident and have used original student loans to attend an eligible degree-granting institution.
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Meet the contributor:
Jennifer Calonia
Jennifer Calonia is a personal finance writer and editor who was born, raised, and currently resides in Los Angeles. She believes smart money management starts with making financial concepts and advice accessible to the everyday person.