Cash In Pockets

If You Paid Student Loans During The Pandemic Payment Pause, You Can Get Your Money Back

Really. Here's how.

Originally Published: 
Asian father and his son is using the laptop computer at their home on Sunday or holiday.

If you were one of the 1.2% of borrowers who continued to pay your student loans during the extended pandemic payment pause, you might be eligible for a refund, thanks to President Biden’s student loan forgiveness plan.

The news comes on the heels of President Biden’s announcement that he would cancel $10,000 in student loan debt per borrower and $20,000 in debt for Pell Grant recipients. He also proposed major rule changes to income-driven repayment programs and the public service loan forgiveness program. Forgiveness is limited to single people earning less than $125,000 per year and married couples or heads of household earning less than $250,000 per year.

In March 2020, former President Trump announced the first of many temporary pauses in student loan payments, collections, and interest accrual for all federally funded student loans. That pause has been extended several times by President Biden and was set to expire at the end of this month. Wednesday’s announcement included news that the payment pause would be extended once more, at least through the end of the year.

But what about those who paid off their loan during the pause or took advantage of the non-accrual of interest to finally chip away at their principal balance? Luckily, they are eligible for a refund on all payments made during the pause, and forgiveness will still apply to their balances.

The Education Department sent out a reminder on the program for borrowers on the heels of Biden’s announcement: “You can get a refund for any payment (including auto-debit payments) you make during the payment pause (beginning March 13, 2020)” on qualifying loans, according to the release.

Refunding payments made during the pause is not a new program, but in light of Biden’s announcement, it could help some borrowers maximize their forgiveness and get some cash in hand at the same time.

Do I Qualify for a Refund?

According to the Department of Education, borrowers have always been able to request refunds of payments made during the pause. The money is returned to the borrower's payment account, and the amount is added back to their loan balance.

Sources say it’s as simple as making a call to your loan service provider and asking for those funds to be returned to you.

How Will That Help My Loan Forgiveness?

Any borrower who qualifies for Biden’s forgiveness plan and paid their loan down to less than $10,000, or $20,000 for Pell Grant recipients, after March 13, 2020, when student loan payments were first paused, can request that those payments be refunded, increasing their loan balance — and maximizing their forgiveness while getting cash back.

For example, if a borrower made $2,000 in payments after the pause began and now has a balance of $8,000, they can request their $2,000 refund from their loan servicer, and then have that $2,000 added back to their loan. Then, they can still have the entire balance paid off with the $10,000 in forgiveness.

This way, student loan borrowers who put down money on their loans can get their cash back, and get the balance of those loans forgiven. Cash in pockets!

Technically, people who owe more than $10,000 or $20,000 in student loans to their servicer can ask for a refund as well, but it doesn’t make as much sense since they’ll still be on the hook for the extra loan payments.

If it seems confusing, call your loan provider and let them walk you through the steps.

This article was originally published on