Borrowers await repayment of federal student loan payments

Some borrowers who requested refunds on federal student loan payments made during the pandemic payment pause are finally seeing balances hitting their bank accounts. But weeks after their initial requests, many more are still waiting.

The pandemic-era CARES Act allows borrowers to seek repayment of payments made on their federal student loans during the payment break. In the weeks since President Joe Biden announced widespread student loan forgiveness, many people are actually applying to get the full $10,000-20,000 relief. to which they are entitled.

“I just felt relieved,” says Marlene Peralta to see the money in her account. Peralta, a 34-year-old from Illinois, demanded a refund from Mohela, her student loan manager, right after Biden’s announcement the last week of August and received the $3,600 four weeks later. .

The process was simple for Peralta. She waited about 40 minutes, but the request itself barely took a minute. “[The representative] confirmed that I wanted the full amount refunded, and I said yes,” says Peralta. He confirmed she would receive the refund, “and that was about it.”

Peralta is lucky. Many borrowers who have made the same request say they have not yet received the funds and are not getting any information from their managers. Peralta advises them “to be patient”. Every repairer is different and sends out refunds on different timelines. Some send paper checks, while others send refunds electronically.

Loan officers, federal student aid and the Department of Education declined to respond Fortune‘s questions about the repayment schedule.

To complicate the process: The Ministry of Education said borrowers who apply for forgiveness will automatically receive a refund for payments they made in the last two and a half years that brought their balance below the amount total discount to which they are entitled. Repairers, many of whom are understaffed due to the pandemic, now have a lot more work on their plates.

However, this means that a borrower who had a balance of $10,500 in their account before March 13, 2020 and made a payment of $1,000 during the payment break would see the $9,500 discharged and receive a refund of $500, as long as he is eligible for $10,000 in relief, according to the Federal Student Aid website.

Other borrowers are still eligible for a refund on any payment made after March 13, 2020, by contacting their Federal Student Loan Officer. But beware: any amount repaid beyond the forgiveness threshold will increase the total balance of your loan and your monthly payments, which will resume on January 1, 2023.

If you plan to apply for a refund, the deadline is December 31, 2023. And it will take some time to process. Currently, wait times are estimated at 50-60 days after your application is processed for most major student loan servicers.

Austin Haymore, a 25-year-old Californian, pushed back on the request for a refund of payments made during the freeze because he thought it would take a long time. But when he finally made the call earlier this month, it only took about five minutes of his time. The student loan representative confirmed that he was eligible for a refund and that his address on file was still correct, then estimated that the refund would arrive in mid-November.

“Honestly, it was really exciting, as well as a relief in some ways,” says Haymore, who asked for $2,000 on Sept. 19. “Money has been tight, so getting some back will be a big help.”

If you’ve already applied for a refund and haven’t heard back from your student loan service, consider checking with the company. Some borrowers have reportedly received inconsistent information on when they will receive their refund, with some being told it takes longer to request a refund over the phone than to wait for the automatic refund in October when the relief application opens .

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