Last week’s bombshell announcement on expanded Public Service Loan Forgiveness was life-changing news for many borrowers. Borrowers who had FFEL and Perkins loans may now qualify for forgiveness. Those who were on the wrong repayment plan will also benefit.
The cherry on top of this great news is that many borrowers will receive refunds for previous payments.
For many years, advocates have been calling for PSLF changes to help borrowers who had issues with repayment plan or loan eligibility. Refunding prior payments is a surprise.
While these refunds are great news, several significant exceptions might prevent borrowers from collecting a refund check.
How Borrowers Who Qualify Under the Expanded Public Service Loan Forgiveness Get Refunds
To qualify for Public Service Loan Forgiveness, borrowers must make a total of 120 certified payments.
The recent changes mean that many borrowers will see a dramatic increase in their number of certified payments. Under the revised criteria, some borrowers will have qualified for PSLF many years ago.
Those who made more than 120 payments will receive a refund for the extra payments. The Department of Education has not released exact details on the refund procedure. However, if the refunds work like the Covid-19 refund requests, the refunds will be issued via the original payment method.
If you think there is even a chance that you qualify for a refund, I’d recommend calling your servicer to discuss your options for the refund. You don’t want them to mail a refund check to an old address.
Sherpa Thoughts: Why issue refunds on prior payments?
These refunds are likely an acknowledgment that the government recognizes that borrowers should have already been given forgiveness and that it was wrong to continue to collect payments.
Additionally, government attorneys may have concluded that refunds were necessary to avoid losing a lawsuit against former borrowers.
Exception: Borrowers Who Already Earned PSLF
Some borrowers consolidated their FFEL or Perkins loans many years ago. They may have already qualified for PSLF and had their loans discharged.
If this situation applies to you, there is no refund available for previous payments.
The only borrowers eligible for a refund are those who newly qualify for PSLF under the revised rules.
Exception: Payment Made Before Consolidation
Another major exception is that refunds will only be issued for payments made towards federal direct loans. This means that borrowers cannot get a refund for payments made towards FFEL or Perkins loans.
An example is the best way to explain this exception.
Suppose you made 60 payments towards an FFEL loan and then realized that it was not eligible for PSLF. At that point, you consolidated your FFEL loan into a federal direct loan so that you could eventually qualify for PSLF. Post consolidation, you made a total of 80 payments.
Under the expanded eligibility, the original 60 payments now count towards PSLF. Thus, you have made a total of 140 PSLF payments. Because you made the 20 extra payments towards a direct loan, they qualify for a refund.
However, if you didn’t consolidate and made all 140 payments towards the FFEL loan, you can still qualify for PSLF, but a refund isn’t available.
Exception: Parent PLUS Loans
A final exception to the refund policy is Parent PLUS loans.
Unfortuantely for many Parent PLUS borrowers, the news here is especially bleak.
To the surprise of many, the Department of Education did not include parent PLUS loans in the expanded PSLF rules. Parent PLUS borrowers can still consolidate to gain PSLF eligibility, but unlike FFEL and Perkins loans, prior payments towards a Parent PLUS loan won’t count.
Suggestions for Borrowers Hoping for a Refund
If there is even a chance that you qualify for a refund, I’d suggest the following steps:
- Update your contact information. If your servicer issues a check, make sure it goes to the right place.
- Send in updated Employer Certification Forms. Many borrowers didn’t send in an ECF for payments made towards FFEL loans because they knew the loans were not eligible. If you have old payments that are now eligible, make sure your public service is documented during that time.
- Make copies of your payment history and all other loan documents. This step shouldn’t be necessary, but it might come in handy. The contract with FedLoan Servicing ends in December and many PSLF borrowers will have a new servicer. The Department of Education should have all of the necessary records, but if there is an issue, it helps to have backups.
I have worked for my State Government since 1992. From 2007-2011 and 2011-2015 I took out Direct Parent Plus Loans for my two children’s college tuition and did not pay on the loans while they were in school. I consolidated all the loans into one Direct Loan after my second child graduated in 2015 and started making on time payments in June 2016. I made all the monthly payments until the CoVid pause. Each year I submitted PSLF qualifying forms signed by my employer. When l checked last year I had 78 qualifying PSLF payments. My loan was serviced first by FedLoans and then by Mohela. In January 2023 I received a letter from Mohela saying that due to the limited PSLF waiver I had received credit for “past payments” (I made no payments prior to June 2016 but was in either deferment or forbearance, starting in 2008, I’m not sure which) and that they determined I had met the requirements of PSLF Program and my loans had been forgiven. Yesterday I received a check from the Federal Government Dept. of Ed. for a student loan refund. My first question is could my loan in fact been forgiven under these circumstances or could it be a mistake? I am eligible to retire from my State job in the near future but do not want to if the letter was a mistake and I have to continue making payments. I had planned to keep working through June 2026 (120 months after my first payment). Second, I have deposited the refund check but do not intend to spend it in case it also is a mistake and they come back and say I must repay it. Is there a time limit for the Government to inform me of a mistake and request repayment and additional payments for PLSF? Thanks for any information.
Hi Marie,
If I was in your shoes, I’d be cautiously optimistic that the debt was actually forgiven. The one detail that might explain why you reached 120 payments and got a refund is the one-time IDR count update. Some of your forbearance and deferment time may have counted towards the 120 payments.
Thanks so much for the reply. Any idea how long I should wait before dipping into the refund? Is there a statute of limitations on how long they have to say “opps we messed up give us the money back?”
Marie,
That is an excellent question, and I suppose the technical answer may depend on where you live. Did the letter you received say that the debt was paid in full or that the remaining balance was forgiven under PSLF? Did the letter come from the Department of Education or your loan servicer?
Also, have you had a chance to review the articles about the various programs that could have helped you reach 120 payments? Did you find anything that you think explains why your remaining debt was forgiven?
I live in Delaware. The letter said “we have determined you have successfully met the requirements of the PSLF program and your loans have been forgiven.” At the end it had “loan details” with the original balance and showed a $0 outstanding balance. It was jointly from Mohela and FSA. On both the FSA and Mohela websites it says my balance is 0. My credit reports all still shows it in the full amount, but that may not have been updated recently. I’ve reviewed various articles in the topic and I’m fairly confident that the only program I would at this time qualify for is PSLF. The only explanation I have for the letter and the refund is that they credited me for time after the loans were taken out, first one in 2007 last in 2015, but before I started to pay in 2016, after my second child graduated. From 2007-2016 I was either in a forbearance or deferment but unfortunately I’m not sure which one. Would that matter. They were PLUS loans I took out for my children.
Hi Marie,
Once the debt falls off your credit report, I think you are probably on solid ground to move forward free from student debt. Every detail that you have mentioned so far sounds like this is a legitimate and final discharge. I think you probably got credit for some of the deferment/forbearance time under this program.
Congrats!
Thanks! 😊
How long does this take. The website was processed on 8/10/2022, but I have yet to receive any information.
Hi Pete,
I’ve seen processing times all over the place, but its now been four months for you, which is a really long time. Now that the deadline has passed, you will definitely want to make sure that they don’t make a mistake with your August application. I think it is definitely fair to call your servicer to ask what is taking so long and when they expect to give you the results.
Best of luck to you!
I am a Texas teacher who had my loans forgiven via PSLF, in addition they credited my bank account with money via the US treasury dept. Do I need to claim the credit/refund on my federal income tax? I assume I had overpaid on my loans.
Thank you,
Congrats on earning forgiveness, Keith. I can’t say for certain about state taxes, but on federal taxes, you should be in the clear. PSLF forgiveness is specifically included from income taxes, and the refund would be for extra payments you made, which also shouldn’t be taxed.
How long after your loans were forgiven did you get the refund ?
Hello, I had made student loan payments under FFEL since 2009 (about 160 payments) and now owe 35,000. I have worked in non profits since 2009. As I understand it, I need to consolidate to a Direct loan and apply for the PSLF before Oct.31. I then provide proof of employment for the waiver. I am worried about consolidating as it will increased my interest rate if it is not approved. If I consolidate the loan to the Direct loan, does this mean I would only get the rest of my outstanding loans forgiven (35K)? Appreciate guidance!
Hi Robin, I can’t say for certain because I don’t have your full loan information in front of me. But it sure sounds like you are someone who should benefit from the limited waiver. By consolidating your FFEL loans into a federal direct loan before October 31, your previous payments can count towards the 120 needed for forgiveness. Your loan servicer should be able to talk you through the entire process to make sure you qualify and don’t miss the important deadline.
I applied under the “old” program years ago when it first started. I had originally been under one of the extended payment plans so most of my payments did not qualify. I applied under the new program and after a number of confusing communications I was finally told I had made 136 qualifying payments on 8/2. Interestingly, both my eligible and qualifying payments changed from April to August. On 8/29 I got the Congratulations! notice. Unfortunately, at that time all my payment records were deleted from the website. I got an email on 8/31 saying generally the same thing in plain English, giving the effective date and saying any payments after the effective date would be refunded.
On Saturday, 9/10, I noticed a number of transfers to my checking account that did not add up to what I was thought the overpayment would be, but with the records gone there was no easy way to tell. I was thinking that I would be spending time on the phone, but this morning the rest of the payments showed up. Very nice surprise! I’m not sure why they did it that way, but after 25 years of federal employment nothing surprises me much, except why they deleted all my records so quickly. Folks might want to print everything so if they have any problems, they have a hard copy.
Great tips Kevin!
Also, congrats on getting PSLF and your refund!
Further clarification on my previous comment: I have not received PSLF yet. I made monthly payments of approx. $600-$620 from 2012 until the COVID pause 4/2020. I believe 10/2017 would be my PSLF forgiveness date if they include the forbearance period from 9/2007 (when PSLF was first offered) to 6/2012 in the calculation. Thank you.
Hello, and thank for taking the time to share your knowledge on this tricky subject. I’m wondering if you have any updates or additional information about refunds based on the “forbearance steering” announcement from DoE on April 19, 2022. I was steered into forbearance for over a decade when I would have qualified for income-based reasonable payments. Eventually, I started paying back my loans under PSLF (I’ve been a federal employee since 2000). If my loans are forgiven as of 2017 due to the combination of repayment periods and extended forbearance since 2007, would I get a refund for the payments I made from 2017-2020?
I don’t have anything new on the forbearance steering front. As for the extra payments, if you have over 120 certified payments, you can usually get a refund for the extra payments (FFELP loans would be a notable excpetion).
Amy – I’m in the same boat as you and was wondering the same thing… it would seem that regardless of payment amount (or in the case of forbearance a zero dollar amount), once you meet the 120 payments, everything after that should be refunded, right? I mean the forbearance period payments either count as payments or they don’t. It seems logical to me. I have not received updates on my account for these periods though, the “sometime in fall” estimate is quite vague and unhelpful, but I understand Dept of Ed is now juggling a lot of different programs and applications. Here’s hoping it’s just around the corner.
And Mr. Lux – thanks so much for all the helpful advice you give, it really is great to have this insight, so thanks for your efforts!
Thank you Mr. Lux for your guidance.
If a person has met the 120 public service certified, eligible, qualified/approved work months with direct/consolidated loans, then any payments over the 120 month threshold, irregardless if between March 13 2020 and October 31,2022, would be a refund due? Even if for many years ago with different loan companies (e.g. navient, etc. which transferred to mohela)–there could be a refund due?
It is my understanding that the Dept of Education would be tallying up all the approved, certified, eligible, qualified, dates? Thank you for your input.
Hi Sara,
That is kind of a tricky question.
For starters, transferring loan servicers shouldn’t impact things at all.
As for payments over 120, you might be eligible for a refund, but it depends on the loan. If you made the extra payments on an FFEL loan, you won’t get a refund. If they were on a direct loan, you will.
Update 9/8/22: Here are the latest details on how they are handling FFEL loans.
Thank you Mr. Lux for your kind response. This site is so helpful to navigate all the means testing complexities and very confusing PSLF waiver program.
They are direct loans not the other FFEL loans. Been paying monthly student loan payments since 2008 onward.
I realize that people can request a refund during the special COVID forbearance March 13, 2020-OCT 31,2022, but that refund is very different than the refund of over 120 months of qualified/certified work payment refunds.
I think I follow. Based on what you have shared, you probably should get a refund for all of the payments past the required 120. That said, it wouldn’t hurt to request a refund for the covid payments just in case.
Hi Michael, I’ve been working in the public sector since 2006 but was never eligible for the PSLF because I had consolidated when I graduated in 2005. I took advantage of the temporary expanded PSLF by consolidating with Fed Loan Servicing and the remainder of my balance was forgiven. My original loans were all federal direct loans. Am I eligible for a refund for overpayment as I paid every month up until April 2022 either by 1) oeverpayment or 2) Covid-19 refund for auto-debit payments made from mid March 2020 through April 2022? Your advice/knowledge greatly appreciated. Sorry, let me clarify previous comment. I consolidated in 2005 and loans were eventually sold to Nelnet. Then I consolidated again with the temporary expanded PSLF (10/2021-10/2022) from Nelnet to Fed Loan Servicing in March 2022. I made about 189 on time payments (no missed payments whatsoever) and worked in the public sector full-time since 2006. Loans were forgiven at the end of July 2022.
Hi Erica, congrats on getting PSLF! Also, I really appreciate the clarification, I was a bit confused based on your first comment.
Anyway, to answer your question, I don’t think there is a refund coming your way. It sounds like the 2005 consolidated loan was a consolidated FFEL loan, and the Department of Education isn’t issuing refunds on those loans (because the extra payment went to the loan holder, who was not the Department of Education).
That all said, given that you made 189 payments, it is definitely worth giving it a shot to see if you can get those extra payments refunded.
Thanks for you thoughts and knowledge! Not sure if I came across as greedy because I am truly grateful my loans were forgiven but the amount that I paid from March 2020 through April 2022 amounted to $11,000 which is still a lot of money for me!
Congratulations! Your loans were discharged through the Public Service Loan Forgiveness (PSLF) waiver with an effective date of December 14, 2021. Any payments after the effective date will be refunded. A letter was sent on August 29, 2022 regarding the discharge.
I received this letter and did not have FFEL loans. I had 170 qualifying payments and was forgiven for the remaining balance. Will they refund the 50 payments? The e-mail above does not make any sense, do I need to call? Appreciate any insight has anyone else had this?
First, congrats on earning PSLF.
Second, the dates you listed and the number of payments you have listed don’t add up. If you had 170 payments, your effective date would be much longer ago. I’m assuming Mohela is your servicer b/c you are a PSLF borrower. They would be the first phone call to get it squared away.
My PSLF has been paid off May 26, 2022. As a result of the payoff…I over paid 14 payments and it has been confirmed that I will receive monies back but when…can’t seem to find a direct answer
Hi Deborah, I don’t think you can get a direct answer to this question because the timeline has been very inconsistent. I’ve seen some people who got their refund within a couple of weeks and others who had to wait months.
Got a confusing message from Fed Loan Servicing yesterday (8/3/22). It was a reply to an earlier email dated 7/8/22 (I guess they are behind on answering emails) . It said that my PSLF was approved on 7/15/22 and I knew that. That was when I got trophies.
They said it is in Fed Student Aid’s hands for final review and approval and it would take 2-3 more months. Do you know if this is the standard process?
Thanks
I looked in my mailbox today and there was a refund check for public service student loan forgiveness. My question is does this mean I no longer have a student loan I need to pay?
Congrats on the refund and getting some (possibly all) of your loans forgiven.
It is still possible that you have private loans or other federal loans that were not forgiven. I’d suggest starting your investigation by taking a look at the federal student loan database to verify that all your loans are paid in full.
Congrats! I am still unsure as to whether I will get a refund.
Although it is not official, I have submitted final paperwork for PSLF. In speaking to them, they have indicated that I qualify for full forgiveness. They have me at 160 payments and 116 qualifying. The final submission will take care of the additional 4. So is it plausible that I would get a refund of 40 payments?
Based on the information shared in this comment, it sure sounds like you could get a refund on the extra payments. Congrats on the progress and good luck getting it finalized!
thanks!
Hi Michael Lux,
I started teaching full time at a public school in 2004. I have been at the same school district from 2004 to present. At that time I had a Navient (FFEL) student loan and have been making monthly payments since then.
I currently have the Navient (FFEL) student loan and a Direct Unsub Consolidation Student Loan. I’m currently in the process of consolidating these two student loans into Direct Consolidation Loan to take advantage of the TPSLF program.
I have been making monthly payments on the Navient loan since 2004. I have been making monthly payments on the Direct Consolidation Student Loan since December 2017. After my consolidation and PSLF Employer Verification form goes through (are approved), do I qualify for a refund? Specifically, a refund of the Direct Loan payments that I have make since Dec. 2017?
I can’t say for certain, but based on the information you have provided, it sure sounds like you will qualify for a refund for the extra direct payments you made.
Thank you for responding & for all the valuable information!
Should I consolidate my Navient (FFEL) loan individually into a Direct Consolidation Loan OR consolidate my Navient loan AND my Direct Unsub Consolidation Student Loan together into one Direct Consolidation Loan?
What would be the best thing for me to do to qualify for the TPSLF program and to possibly receive a refund for payments over 120 I have made on my Direct Unsub Consolidation Loan??
Hello Michael,
Thank you for responding & for all the valuable information!
Should I consolidate my Navient (FFEL) loan individually into a Direct Consolidation Loan OR consolidate my Navient loan AND my Direct Unsub Consolidation Student Loan together into one Direct Consolidation Loan?
What would be the best thing for me to do to qualify for the TPSLF program and to possibly receive a refund for payments over 120 I have made on my Direct Unsub Consolidation Loan??
Hello Michelle,
Congratulations!! What type (servicers) of student loans did you consolidate? I just consolidated my Navient (FFEL) & Direct Loans.
Additionally, how long did it take to consolidate your student loans and how long did it take to receive the refund check?
Do you think they are considering or will refund qualifying payments made on FFEL loans prior to consolidation? This decision seems inconsistent with the very premise of the waiver – to provide credit for payments that should have counted toward PSLF. On one hand, for forgiveness they count, but on the other hand, for the refund, they don’t. I feel like like they should reconsider, especially since private loans companies were not forthcoming about consolidation benefits, even when I called asking questions in 2020 about payment hold, and the recent lawsuit won by Attorney Shapiro is a testament to this. Is anyone trying to reverse this decision?
This is a great question. Ultimately, I think that the reason they are not refunding FFEL loans comes down to the federal vs. federally held distinction. The government doesn’t own FFEL loans. Instead, it guarantees that they will get repaid.
I think the government is unlikely to be willing to pay off a debt owed to a third party, forgive the debt, and then offer refunds for payments that went to that third party.
The FFEL program has been a mess for many different reasons, but I suspect the limited waiver is the best-case scenario for borrowers pursuing PSLF.
Thanks for your website – so many questions have been clearly answered here! What are your thoughts requesting refunds from the individual FFEL lenders? I reached 120 payments with Navient in 2017 and was told that my loans didn’t qualify for forgiveness, therefore I continued to make Income-Based payments which didn’t even cover the interest each month. I never made enough to make a difference in the principal, but they continued to make money off me! I retired from teaching last year and was so thrilled to have received the PSLForgiveness however I think about how lovely it would be to be refunded the $13,000 that I overpaid.
Thank you for the kind words!
I wish I could offer you some words of hope regarding refunds, but I would be shocked if Navient or any other FFEL lender refunded any payments. I can’t imagine a scenario in which that happens.
I actually had 137 qualifying payments toward the PSLFP. I was forgiven 120. I was issued a refund for the balance (over $10,000) that was issued by the US Treasury.
Incidentally, I had consolidated all loans that were serviced by Fedloan Servicing.
Hello Michelle,
Congratulations!! What type (servicers) of student loans did you consolidate? I just consolidated my Navient (FFEL) & Direct Loans.
Additionally, how did it take to consolidate your student loans and how long did it take to receive the refund check?
Wow. Yesterday I got a letter that says that we have paid 134 qualifying payments, but the balance is still there. Maybe this takes a few days? I am happy for you!
That sounds like great news! Congrats Mary!
I just got my loans forgiven !!! I made 145 qualifying payments . How long after yours were forgiven did you have to wait for the refund? Just curious … thank you
Is a PSLF refund taxable?
There should not be any tax on a PSLF refund.
Thank you so much for your response !!!!!
I feel like a jackass because I know so little compared to the rest of you. I started teaching in 2007. I feel like I‘ve been paying my loans for 1000 years. The first reassessment left me with 12 more payments, the POOF, it was all forgiven. AND THEN 25 deposits of $398 dollars appeared in my bank account. $10,000. I didn’t expect any refund! What witchcraft is this? I’m grateful and also so mad that it was apparently this easy for them to give us relief this whole time.
Well said Jenni!
And thank you for your service. You are in an extremely challenging, often thankless profession, and you deserve the relief you just earned. I’m so happy that it worked out for you!
Last week my loan was forgiven “effective 7/31/19.” When I saw it had been forgiven, I briefly saw a $505 credit on my account, but I have made 145 qualifying payments in total, all on a direct loan; I hit 120 payments before 7/31/19 and continued to make some payments after that date. I was hoping I would get refunded for all of the 25 extra payments, but it sounds like they’re only planning on sending me $505. Am I misunderstanding how refunds are being calculated?
If you had a direct loan at the time forgiveness was earned, you should get a refund on all of the subsequent payments. If you made later payments on a non-direct loan, such as an FFEL loan, those payments don’t qualify for a refund.
I took screenshots all along the way, just to have records, because at each step, they seem to POOF remove the previous actions. But anyway, It took about 2-3 months before my big refund check came after they forgave my loans. And at first, they said I only had 100 qualifying payments. But instead I had paid well over the 120 payments (been paying since 1993).
Thanks so much for this post and the comments! My story: I’ve been paying on loans since 1997; however, some of those early years, I used reduced income payments, forbearance, etc. Since 2007 though, I’ve been paying the required monthly payment. I’ve worked at a state funded university since 97. When the PSLF started, I wasn’t eligible. I was looking up student loan forgiveness at least once a month to make sure I knew the latest. When this TEPSLF was announced October 6, I jumped in. Sent my application in, got my employment certification in, and waited. Here’s the timeline, most recent notification first. So on 10/7 I submitted my paperwork. My employer was lickedy-split with sending the employment verification. Then on 11/10, FedLoan acknowledged my application. On 12/30, they sent a notice that I was 20 payment short of totally qualifying for forgiveness and said that once I make 20 more payments they’ll forgive the rest. I called, waited for call back which came an hour later, then was transferred and waited another hour. I also sent an email with details about the various movements of my loans.
Then on 2/2/22, I received noticed they went back to 2011 for forgiveness, so my loans are completely forgiven (no more additional payments necessary. However, my loans go back before 2011 (yes consolidated before then). So now I’m waiting for them to review again. Sent email about this. Have called.
Today, 2/22/2022, there’s a weird thing on my account. I’m thinking it’s the amount of my refund. Where yesterday it says “Manage Payments” and had $0, it now lists the amount I believe is my refund amount. We’ll see. I’m learning patience with this thing, as I know the people working there are trying to figure it all out as well. My current balance is still listed as $0. So the loans are definitely zeroed out.
02/02/2022 Limited Pslf Waiver Notification Electronic
01/11/2022 Emergency Relief For Fed Student Loans Electronic
01/05/2022 Emergency Relief For Fed Student Loans Electronic
12/30/2021 Pslf Application Results Electronic
12/30/2021 Pslf Qualifying Payment Update Electronic
11/22/2021 Pslf Forgiveness – Employment Approved Paper
11/12/2021 Your Request For Pslf Forgiveness Paper
11/10/2021 We Received Your Pslf Application Paper
Hello Teri,
My timeline was nearly identical to yours. I also have had a value under “Managed Payments”. I am hopeful the value is my overpayments, but I am also very grateful my loans have been forgiven. Fingers crossed.
I will update my situation, if indeed I receive the overpayments.
Thanks, James. It helps so much to know others are experiencing similar anxiety! 🙂 Three days ago, the dollar amount under “Managed Payments” disappeared. So now I’m waiting to see what happens next. I’ll also update if I received the overpayments. Teri
I’m having the same experience. I have recently been notified that my loans were forgiven, as of 2020, after the payment pause. I believe that they should have been forgiven as of 2017, resulting in a refund. I hope we all receive good news regarding the refund!
Much to my surprise. I received a lump sum payment in the mail. It was the dollar amount which briefly appeared under “Managed Payments”. Good luck and I hope you all receive good news from DirectLoans.
Congrats James!
I’m glad to hear it worked out for you. Thanks for keeping us updated.
I’m curious to hear if you received a refund? My situation and timeline are similar. And did the refund amount show up in your fed loan account?
Thanks for all this incredible detail. I have been in public service since 2004. My loans were consolidated through Aspire. Like so many others, I was told I was ineligible for PSLF. The October Surprise is a godsend. I am confused about refund of overpayments (which for me would be something like 46 payments.) I checked out this link above and am trying to square the last sentence in the answer to the question “If I made more than 120 payments, will I get a refund?”
“It depends. If the eligible payments made in excess of 120 were made after the consolidation, then yes, you will get a refund for
payments made on the consolidation loan. But if the excess
payments were made prior to the consolidation, you will not be
refunded for any payments earlier than the consolidation loan. If
you exceeded 120 payments on a non-consolidation loan, you will
be refunded for payments beyond the 120th payment.”
My excess payments were made prior to my recent consolidation to FedLoan, but they were also on a non-FEDERALLY-consolidated loan. I guess I’m trying to square what this non-consolidation loan is…
Thanks for your excellent resource here.
Great question, because some consolidated loans are FFEL loans, which it sounds like yours were.
Here is a better way of saying the rule: extra payments made towards a direct loan can be refunded. If you made extra payments towards a previously ineligible loan such as an FFEL loan, they don’t get refunded.
So if your 166 payments were all made towards an FFEL loan, you won’t get a refund. If the 46 extra payments you referenced were made on a direct loan, then you would get a refund.
My loans were just forgiven under PSLF. My 120th payment should have been July 21,2017. Any idea on when the refund will be issued? I had just straight direct loans none with FFEL. I consolidated way back in 2004, so I’m assuming I’ll be credited for the 31 extra payments to date.
I don’t know that it is safe to assume that you will get a refund. I’d get in contact with your servicer to verify your refund status. I’d also suggest documenting all of the extra payments that you made.
As for how long it will take, I think it depends on a number of different factors. They are still processing people on limited waiver issues and may not be done until spring. A refund could be relatively fast, or it may take months. Your servicer might have a more precise estimate.
See my post above. It is slower than we’d like it to be. When I called about a month ago and finally talked to a person, she said, “oh, your loan is forgiven and you’ll have refund for payments since 2017.” This is what I had calculated by FedLoan did not even show the total forgiveness at that point. The website showed I still have 20 payments to make before 120. However, on 2/2/2022, I rec’d the notification that the total balance had been forgiven. Today, there’s an odd number on the account under “Manage Payments,” which is what I figure to be the refund amount. When I’d called and that person told me I’d get a refund, I was thrilled, but then I thought, “I think she said that too fast and is probably reading off someone else’s account.” I’m hopeful now.
Hi,
I had the remaining balance of my direct loans forgiven this fall, having made 154 qualifying payments. But when I recently spoke to the rep at Fed Loan Servicing (January ’22), I was told that I would not receive any refund beyond that for the one payment I made after my loan was effectively discharged at the end of October ’21. They were pretty final about it, which runs contrary to what I have been reading, though I am not sure what I should do next. I had applied for PSLF a few years ago, was turned down because I was in an incorrect payment plan. Frustrating for having made payments for years and years, but it doesn’t look like I’ll get anything back for the overpayments I made.
Any advice on who I should reach out to next? Thanks for all of your comments and research.
Hey Jeff,
Did you consolidate this fall and qualify for forgiveness under the limited waiver?
I’m not sure what to suggest without knowing what loans you had and when/if they were consolidated.
I recently consolidated to a Direct loan from an FFEL loan with Navient. I have talked with Fed Loan Servicing agents (2x) who both said I would eventually get refunded for the overpayment (past October 2017) in addition to the amount still owed forgiven. I am still waiting to have the remaining balance forgiven, as my consolidation back to a direct loan occurred about 6 weeks ago. Still waiting that my employment qualifies (which is should) Fingers cross both the forgiveness and a refund both occur. Melissa’s response on 1/14/22 makes a little nervous on the refund portion.
Hi Tim. I was told the same thing before my FFEL consolidation went through successfully. I called FedLoan Servicing the day after my account reflected a zero loan balance to inquire about the refund of my extra FFEL payments. This is when I was told that a refund would not be coming since all of my overpayments were made before the consolidation to a direct federal loan. Earlier this week, I called the Federal Student Aid Ombudsman. I was instructed to file a complaint on studentaid.gov/feedback which I did. I also called the office of Senator Elizabeth Warren and will be requesting in writing that her staff intervene on my behalf. I have been commenting on this issue on different social media channels too. It is possible that the Department of Education is still examining this issue, but I would be vocal about it now. Hope this helps!
Thanks for the information. That is disappointing! Hopefully your right that the Department of education is still examining the issue. I will file a complaint also once/if my remaining balance is forgiven.
Totally disappointing! I was expecting a refund for all payments beyond October 1, 2017 too. Another roadblock but par for the course I guess 🙂
Hi Melissa,
Did you ever get a response from the Ombudsman office? I finally got the letter my balance was forgiven!! It seems unlikely I will get a refund on the 4 years since 2017, but would like to try in someway see what can be done. Any advice would be great!
Tim
Hello Michael. I am a lawyer and graduated in May 2007. I have been working at a hospital since September 2007. The hospital is a 501(c)(3).
Like a lot of law school graduates, I graduated with six figure loans. I applied and was rejected from the PSLF program in 2017 due to the usual wrong loan type, payment plan, etc. I was one of the unfortunate recipients of FFEL loans simply due to the timing of my law school years (2004-2007).
However, I consolidated my remaining FFEL loans into a direct federal loan in October 2021. The loan was officially consolidated on November 2, 2021. On January 11, 2022, I received notice that my remaining balance ($25,540) had been discharged through the PSLF waiver. I do not even want to tell you how much that I have spent repaying my federal and private student loans, but $25K is not chump change either.
I also thought that a refund would be coming for my years of federal payments beyond October 2017. However, FedLoan Servicing informed me when I called this week that refunds will not be issued for those four years since they can only look at the period for which I had a direct federal loan. This seems odd to me since I only had received the discharge due to my FFEL loans being taken into consideration in the first place.
I plan on contacting the Federal Student Aid Ombudsman and Senator Elizabeth Warren. I grew up in Massachusetts. These FFEL loans have been nothing but trouble! I also did not qualify for Covid loan relief since I had commercially owned FFEL loans and not ones owned by the Department of Education. We need to band together in demanding FFEL refunds!
Thanks for taking the time to share your thoughts, Melissa. I’m in agreement with you on the FFEL mess. I also think your plan to contact the Ombudsman and Senator Warren is a good one.
There are plenty of borrowers in your position, and hopefully, we can apply enough pressure to the right people to get them to change the policy.
Thanks Michael! I will circle back with any updates. I appreciate you and the information on your site.
Where is the authority on the assertion that a student borrower may only receive a refund if the overpayments were made on direct loans and not FFEL loan payments that otherwise now qualify through consolidation? On studentaid, gov, it does not speak to this issue. It merely states that if you have made more than 120 payments on an “existing” direct federal loan, you will receive a refund. It does not distinguish. In fact, it is silent on this issue. Has the DOE specified policy on this issue? The language of an “existing” direct federal loan, in my guess, was used to exempt those who have already benefited from the PSLF program, that is, those who have already had their loans discharged, from receiving a refund. Those loans no longer exist, as they have been paid off. I have spoken to Fedloan servicing agents, and was told I would qualify for a refund now that I recently consolidated my FFEL loans into one direct loan, even though all of my payments that were made (including overpayments) were made on FFEL loans prior to consolidation. I have made almost two years of overpayment payments based on prior FFEL loan payments. If you think about it, this makes sense. How can the government forgive loans retroactively under this new program and then keep two years of overpayments? Wouldn’t that be considered conversion of property? I don’t think an entity can forgive a loan and then keep the rest of the overpayment money for itself without justification. That is probably why the DOE brought up the concept of overpayments with the new program, out of fear of being sued.
There are some excellent questions here. I don’t want to speculate about any potential lawsuits, but I can try to clarify the DOE policy as I understand it. I think the big issue is that an FFEL loan is not a federal direct loan. FFEL loans are assets of a third party, but they are guaranteed by the federal government. Consolidation pays off the loan and creates a new federal direct loan.
Unfortunately, I don’t think you can rely upon the assurances of the customer service reps at Fedloan servicing. You are definitely right that you have paid more than your fair share, and I hope that I’m wrong on this issue, but I’d be surprised if you received a refund. That said, it is possible that they have tweaked the refund policy. Please keep us posted on how it goes for you.
I agree with you. FFEL loans are not technically direct loans. However, from what I have read, it appears the spirit of the limited waiver changes that allow these payments to now be counted through consolidation rests on an assumption that borrowers may have been misled somewhere down the line (usually by customer service representatives of loan servicers) into thinking that they do not qualify for PSLF or were not told the proper rules for it, and thus abandoned their quest for loan forgiveness. This is a second chance for many deceived borrows. It will be deeply saddening if it is ultimately true that someone such as myself who was misled can now get his loans graciously forgiven by the government, but at the same time, by the way, “we are keeping your extra payments for no real reason” that you otherwise would not have had to make if you were not misled in the first place. Surely, that is not what the intent is for this limited program, especially since there is no clear policy yet set forth concerning refunds, only the vague general language on studentaid.gov. I just hope that the government’s plan is not to pat public servants on the back and reward them for years of having to endure a mishandled program but at the same time punch them in the chest with respect to overpayments. I will keep you posted. Thanks for your response.
I think the lack of refunds for those making payments to a consolidated FFEL needs contested.
The date of when payments count is for those payments after October 1, 2007. I paid under an income-driven repayment plan. BTW, why were notices not sent to all direct loan recipients in 2007 that certain consolidation programs would be excluded?
Now, I discovered on 10/29/2014 that my FFEL consolidated loan was not going to count towards PSLF. (That is when a new fact sheet about the program was issued.) I had planned that I would have cancellation at the end of 2017, which was my “Free by 40” plan (I had two private loans I was paying off at a rate to have them paid off by that time as well.)
So, I could have decided at that moment to re-consolidate back to a “Direct” loan and my clock and payment count would have had to start over, which would have meant another 120 payments AND payments at a rate greater than what I was paying at the time, such that at the end of 120 payments, I would have paid off my loan, there would have been nothing left to “forgive.” So that would have been a dumb choice; the direct loan wasn’t offering a better interest rate, and was going to make me pay more than the $372.14 a month I was already paying (about $500 a month instead.) So there was no incentive for me to consolidate at that time. But HAD I consolidated then, and kept paying… I hit 120 payments on 1/15/2018. So, that means I have made 46 extra payments since then; and had they been under direct, I would be entitled to my $17,118.44 back (or more since DIRECT was going to have me pay more per month.)
I have worked at 501c3’s since leaving law school. I paid off my two private loans. I currently have $30,666 on my loan and I consolidated this month to direct to get into the expanded program.
I should just be happy that the remaining $30k is being forgiven (I’ll believe when I see) but each time I think I have done the right thing with my loans, it has bit me in the tuches!
Well said! The limited waiver is a huge step forward to address some major issues, but it certainly doesn’t make things right. There is more work to be done.
Hopefully your last 30k gets forgiven without any further headaches. Best of luck to you and thanks for your service!
Thanks for this great info. Do you know if PSLF refunds will be taxed?
I’m not a tax attorney, so I can’t say for certain, but I’d be shocked if this was taxable. Student loan forgiveness isn’t currently taxed, so I can’t even see an argument to tax the refund for overpayment.
Can you point to the source for this assertion?
“Under the expanded eligibility, the original 60 payments now count towards PSLF. Thus, you have made a total of 140 PSLF payments. Because you made the 20 extra payments towards a direct loan, they qualify for a refund.”
Thanks
That is a fair request. I have a couple sources on this one:
Here is studentaid.gov on PSLF refunds generally.
Here is an update from a reputable non-profit on how they will be treating refunds and the waiver.