WASHINGTON–The U.S. Department of Education has confirmed that borrowers who are eligible for federal student loan debt cancellation and who made student loan payments on their loans during the COVID-19 payment pause will automatically receive a refund on any amount of money they paid, up to the amount of cancellation for which they are eligible.
According to the Office of Federal Student Aid, approximately 9.1 million federal student loan borrowers have made at least one payment between April 2020 and March 2022.
In its new announcement, the Department of Education clarified that borrowers who would have received cancellation on these payments will now have their money automatically refunded when they apply for cancellation.
Meanwhile, the nearly 1.9 million borrowers who entirely paid off their accounts during this time, including those who refinanced with a private lender, will not receive an automatic refund but can contact their student loan servicer to request a refund, the department said.
‘Positive & Necessary’
“This move by the Education Department is a positive and necessary step for fulfilling President Biden's historic promise to cancel student debt,” said SBPC executive director Mike Pierce in a statement. “Anyone who has interacted with the student loan system in this country knows that automatic relief programs are the only relief programs that work. Automatically providing these refunds will ensure that borrowers are made whole if they made payments during the payment pause without having to rely on the whims of abusive and ineffective servicers to access this relief. We’re glad to see that the Department understands the importance of automation and maximizing relief to borrowers. We urge them to deliver the rest of Biden’s promised debt cancellation by making it all automatic.”
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