I Already Paid My Student Loans — Can I Get My Money Back?

President Biden’s student loan forgiveness plan provides as much as $20,000 of forgiveness per person, but what if you’ve already paid your loans?

Hi everybody since the student loan forgiveness news came out i’ve been getting a ton of questions and one of the most common questions i’ve gotten is if i’ve already paid back my student loans then what can i get that money back so we’re going to dig into that before we do please go ahead and hit subscribe to my channel to keep up with all of my personal finance

And investing content and as always please leave me any questions you have about this in the in the comments i will be happy to answer questions individually as i can also be sure to check out a message from this video sponsor the motley fool click the link you see on the screen and you’ll get the top 10 stocks to buy now alright so let’s get into the student loan

Forgiveness just to kind of quickly recap you can see the full video i did on the student loan forgiveness plan i put the link in the description of this video but just to kind of run through some of the important points president biden announced that he was going to forgive up to ten thousand dollars of student loan debt per borrower subject to income limitations

Or twenty thousand dollars for borrowers who got a pell grant the application for loan forgiveness is expected to be available in early october and once you apply it will take four to six weeks to get forgiveness now the payment and interest pause on student loans has been extended for the last time through december 31st of this year so borrowers who qualify are

Advised to apply for relief by november 15th to make sure that their loan forgiveness application goes through before the payment pause is over so to the question of can i get my money back if i’ve already paid my student loans the short answer is maybe for the purposes of this discussion we’ll separate student loan borrowers into three distinct groups of people

Who qualify for loan forgiveness first there’s the group that made some of their loan payments during the pause so since march 2020 the second group are those who have paid off their loans completely or have refinanced them into a private student loan during the pause and last are people who paid off or paid down their loans before the march 2020 pause so we’ll

Take those one at a time the first group is people who made some loan payments during the pause the vast majority of student loan borrowers took advantage of the payment pause and haven’t paid a dime toward their student loans since since prior to march 2020 so however nine about nine million people did pay at least one payment for their student loans during that

Time if you qualify for student loan forgiveness and you made some student loan payments during the payment pause those payments should be refundable in fact refunds will be automatic for several for a bunch of borrowers if two criteria apply your refund will be automatic if a you successfully apply for student loan forgiveness and b the loan payments you made

Took your loan balance below the amount that you are approved for forgiveness now if you paid down your loans to say you know forty thousand dollars and you’re approved for ten thousand dollars in forgiveness the government’s just gonna forgive ten thousand dollars of your existing bonds not refund your payments but as you can see in the example on your screen if

You’ve paid your balance down let’s say for example that you owed fifteen thousand dollars on your loans before covid you paid eight thousand dollars during the payment pause uh over the past two years or so and you are approved for ten thousand dollars in loan forgiveness now you paid down eight thousand dollars so that leaves you with a seven thousand dollar

Loan balance so that will be wiped out that your that loan will just be cancelled but you are approved for ten thousand dollars so you would get a three thousand dollar refund of the payments you made during the pause and that would happen automatically in cases like that now if you don’t qualify for automatic refunds let’s say that you know you don’t apply you

Don’t qualify for you your loan balance hasn’t been paid down below the maximum amount you just want some of the payments you already made to be forgiven and sent back to you uh instead of the the government just reducing your loan balance in that case contact your loan servicer and you still may be able to get for uh your payments refunded group number two are

Those who paid off their loans in full during the the payment pause or refinanced into a private student lender so in these cases if you apply for and are granted loan forgiveness you can contact your loan servicer anytime until december 31st 2023 so a little over a year and request a refund of the payments that you made this applies to almost 2 million people

So this isn’t a really tiny group so as an example just to put some numbers in this let’s say that you had forty thousand dollars in student loans and you refinanced through a company like maybe so fire or one of those private student lenders which is effectively paying your loan off the government got forty thousand dollars and sophia’s or whoever you financed

It through assumed the balance in this case you can contact your loan servicer and get some of your loan reinstated up to the amount you are approved for forgiveness for and it could then be forgiven and you can get a refund of those payments so in if you refinance your student loan or paid it off in full and you’re approved for ten thousand dollars in forgiveness

You can request your loan servicer to reinstate a ten thousand dollars of your loan balance and then use the forgiveness to get a refund on that the group number three uh are people who paid off or paid down some of their loans before this pause took effect in march 2020 and unfortunately for this group it doesn’t appear that you’ll be able to do anything about

Money you’ve already paid now i don’t mean this to be a political message at all this is just kind of stating the facts if you’re in that third group as of the information we currently have you will not be eligible to get refunded the money that you’ve already paid so final thoughts one keep in mind that this only applies to federal loans if you have private

Student loans and you’ve paid them down even during the federal payment pause this doesn’t apply to you and second and most importantly there’s a lot of information about student loan forgiveness that we don’t know yet the department of education had said in the coming weeks more information will be available about the process and the rules and all the specifics

So i’ll be sure to keep you posted as we learn more information i’m just kind of giving you an overview of what we already know um so again please subscribe to me i will be i’ll do my best to keep you informed as soon as any news comes out on this this topic and be sure to leave me any questions you may have after watching this in the comments once again thank

You so much for joining me be sure to click subscribe if you don’t subscribe to my channel already and as always this video is sponsored by the motley fool be sure to visit www.fool.com frankel to receive the 10 top 10 best stocks to buy now you

Transcribed from video
I Already Paid My Student Loans — Can I Get My Money Back? By Matt Frankel CFP®