PBiden has announced that he will forgive federal student loans up to $20,000 each. It is a long-awaited step to eliminate student debt for about 20 million Americans.
This plan can forgive federal student debt up to $10,000 for those earning less than $125,000 a year and $20,000 for those who have received Pell Grants. These grants are designed to aid low-income students with the same income requirements.
Biden also extended the pandemic-related pause on federal student loan payments “one final time” through Dec. 31, announcing that borrowers would be expected to resume payments in 2023.
If borrowers were still making monthly payments in the time pause that began on March 13, 2020 they may request a reimbursement for payments made on federal loans that were made in that period.
“You can get a refund for any payment (including auto-debit payments) you make during the payment pause (beginning March 13, 2020),” according to an explainer on the Education Department’s Federal Student Aid site.
Who can get student loan reimbursements?
Borrowers who paid off federal student loans in full since March 2020 can request a refund. But, most borrowers will not have made payments while the suspension was in effect.
Only 1.2% did so, according to Mark Kantrowitz’s analysis of data from the Education Department. Mark Kantrowitz is an expert on student loan issues.
How do I request a return?
According to the U.S. Education Department, borrowers are advised to contact their loan servicer in order for them refund any payments they made within this window.
Beyond those refunds, the department is planning to launch an application in the coming weeks that borrowers can use to apply for loan forgiveness under Biden’s new plan. Eight million borrowers may be eligible for debt relief if their income information has been filed with the Education Department.
Do you think it is a smart idea to ask for a refund?
Under the Biden Administration’s new debt forgiveness plan, eligible borrowers’ relief is capped at the amount of outstanding debt they owe. A borrower who is entitled to $20,000 relief will have to pay $15,000 for student loans.
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