Companies managing the Education Department’s $1.6 trillion portfolio of student loans said they are being inundated with refund requests from borrowers who made payments during the pandemic pause.
While most of the nearly 42 million people covered by the pause have not made payments since its inception, about 9 million borrowers in good standing kept sending money, according to the Education Department. Borrowers have one year to apply for a refund. The agency has confirmed that eligible people who paid off some or all of their debt in the last two and a half years could still qualify for cancellation if they meet the income threshold.
There is no guidance on the Education Department website “about how refunds will work relative to forgiveness. And given the government is still building this plane after already taking off, I think waiting for official guidance is best,” he said. Buchanan said his members have received “a ton” of refund inquiries lately. Several student loan servicers pegged the number in the tens of thousands.
a refund and were ignored. “I would hate for capacity issues at the servicers to make a fool out of everybody that is telling people they can trust this,” Pierce said.Some payments made during the freeze were involuntary, the result of the department continuing to garnish the wages ofearly in the pandemic. Some borrowers, particularly those working toward public service loan forgiveness, kept paying out of distrust.
Others, like Gray and Lauren Cole, saw an opportunity to rid themselves of debt without paying interest. The couple in Gainesville, Ga., spent 2020 and 2021 paying off the $40,000 in student loans Gray acquired while studying kinesiology and ministry at Mississippi College. “We were pretty fortunate that even while we were on lockdown during covid, we were still able to work,” said Lauren Cole, 32, a user experience designer. “We had already been working hard to pay off our debts and stayed committed.” When she learned of Biden’s cancellation plan, Lauren said she was happy for her friends who would benefit but certainly did not think she would be among them.
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