What happens if you paid off your student loans during the pandemic?
You can get a refund for the entire amount you paid during the payment freeze, according to the Department of Education. However, you can choose a lower amount. You might pick this option if, during the pandemic, you paid enough to get your debt below the maximum amount of forgiveness.
If the total payments exceed 120, you might be eligible for a PSLF overpayment refund. Will you get a refund after student loan forgiveness? If you've already been granted student loan forgiveness or repaid your loans, you don't qualify for a PSLF overpayment refund.
Typically, months in forbearance and deferment do not count towards PSLF. However, months during the COVID-19 payment pause (March 2020-September 2023), months that qualify under the IDR Adjustment, and months where loans are being placed on administrative forbearance after the repayment restart will count toward PSLF.
“The data released today once again make clear that the Biden-Harris Administration's relentless efforts to fix the broken student loan system are paying off in a big way, with more than 3.6 million borrowers now approved for nearly $132 billion in loan forgiveness.
If you repay your loans under an IDR plan, any remaining balance on your student loans will be forgiven after you make a certain number of payments over 20 or 25 years. Past periods of repayment, deferment, and forbearance might now count toward IDR forgiveness because of the payment count adjustment.
You can no longer get refunds for payments you made during the COVID-19 payment pause. The refund benefit ended on Aug. 28, 2023. When will I have to resume loan payments? For most borrowers, your first payment will be due in October 2023.
Log in to StudentAid.gov to track your PSLF progress. For updates on your application status, visit MOHELA's website or contact them at 1-855-265-4038.
If your qualifying payment total is at 120 or more, you can opt into forbearance and stop making payments on your loans. If you continue making payments, any overpayments will be refunded if you have no additional outstanding loans.
The buyback opportunity is only available to you if you already have 120 months of qualifying employment and buying back months in forbearance or deferment would result in forgiveness under PSLF or Temporary Expanded PSLF (TEPSLF).
However, the time-limited PSLF rule changes allow you to get credit for periods of repayment before you consolidated those loans. Now you will get credit toward PSLF if you were on “In Repayment” status after Oct. 1, 2007 for the loans you consolidate, and your employer qualified under PSLF Program rules.
Will Mohela loans be forgiven?
Once you have made your 120th payment, submit a PSLF form to count your qualifying payments and apply for forgiveness. After we receive your PSLF form, your loans will be reviewed for eligibility for forgiveness.
Working full-time for a public service employer is a requirement for PSLF, and you'll need to submit an employment certification form for each such employer in order for your loan payments to count. You can go as far back in your employment history as October 2007, which is when the PSLF program launched.
As of mid-July 2023, approximately 662,000 borrowers have qualified for forgiveness under the limited PSLF waiver. Although the limited PSLF waiver period has ended, some borrowers who submitted their applications prior to the end date may continue to have their applications processed from the waiver period.
People with private student loans or without other debt tend to benefit more from paying off student loans early. If you have federal student loans and pay them off early, you could lose the opportunity to take advantage of a student loan forgiveness program (if you qualify).
Thanks to the Biden-Harris Administration's SAVE plan, starting today, the Administration will be cancelling debt for borrowers who are enrolled in the SAVE plan, have been in repayment for at least 10 years and took out $12,000 or less in loans for college.
Once your student loans are paid off, you just want to confirm it. First, you should receive a letter from your lender congratulating you and confirming that the loans were paid off. Save this letter forever. It's important to be able to show you're debt free should anything happen with the lender in the future.
- Building an emergency savings fund.
- Saving for retirement.
- Starting to invest.
- Buying a house or renovating the one you have.
- Moving to a new area.
- Pursuing necessary or elective medical treatment.
- Making a career change.
- Buying a car.
Any borrower with ED-held loans that have accumulated time in repayment of at least 20 or 25 years will see automatic forgiveness, even if the loans are not currently on an IDR plan. Borrowers with FFELP loans held by commercial lenders or Perkins loans not held by ED can benefit if they consolidate into Direct Loans.
Over COVID I paid off the remainder of my student loans (about $12,000). In October I applied for a refund and several months ago I received a refund check for the amount I paid off during the payment freeze. I haven't spent any of it and have just had it sitting in my savings.
You can take a tax deduction for the interest paid on student loans that you took out for yourself, your spouse, or your dependent. This benefit applies to all loans (not just federal student loans) used to pay for higher education expenses. The maximum deduction is $2,500 a year.
Will student loans take my taxes in 2024?
Collection activities are currently paused for all federal student loans through September 2024, which should protect your 2022 and 2023 federal and state tax refunds. But you may need to take action.
MOHELA, the loan servicer for the PSLF program, has stated that payment counts for PSLF may temporarily show zero qualifying payments. This can be really confusing for borrowers who were told they needed to consolidate their loans in order to be eligible for PSLF or to maximize their eligibility for PSLF.
Your loan servicer should let you know when your student loan debt is discharged. Anyone who chooses to opt out of the discharge will return to repayment when student loan repayment resumes, with interest resuming on September 1 and payments due starting in October. Subscribe to the CNBC Select Newsletter!
What is the Public Service Loan Forgiveness Program? The Public Service Loan Forgiveness (PSLF) program forgives the remaining balance on your federal student loans after 120 payments working full time for federal, state, Tribal, or local government; the military; or a qualifying non-profit.
Any month when your scheduled minimum payment on an income-driven plan is $0 will count toward Public Service Loan Forgiveness (PSLF) as long as are employed full-time by a qualifying employer during that month.
