Reasons for receiving a student loan refund
Here are the most common reasons: The amount of federal student loans applied to an account exceeds the account's outstanding balance. More was paid than actually due. There was an account balance adjustment that resulted in a lower balance owed.
After student loan forgiveness, the Education Dept. is sending some borrowers refunds. What to know. The Biden administration has forgiven student debt for millions of people. Some borrowers have also received large refunds.
You may be eligible for income-driven repayment (IDR) loan forgiveness if you've have been in repayment for 20 or 25 years. An IDR plan bases your monthly payment on your income and family size.
If there are funds from student loans left over after all tuition and fees are paid, students may receive a student loan refund check. This check can be used to pay for other educational expenses or can be returned. Keep in mind that this money will need to be repaid with interest.
You could get a refund
Loan discharge has additional results: You could get a refund. Depending on the type of discharge you receive, you could receive a refund of some or all payments you made on the loan.
You earned below the threshold
Get a refund if your annual income for a previous tax year was below the repayment threshold.
Most schools have an online portal telling you if you get a refund. It may tell you outright, or it might just show your total aid vs. the amount your school billed you.
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.
Your student loan servicer(s) will notify you directly after your forgiveness is processed. Make sure to keep your contact information up to date on StudentAid.gov and with your servicer(s). If you haven't yet qualified for forgiveness, you'll be able to see your exact payment counts in the future.
To qualify for refund eligibility: Loans must be federal student loans from the Department of Education (not private or a refinance loan). The loans must be owned by the U.S. Department of Education (more on that later).
Refunds for all types of financial aid will begin 30 days after the start of the semester. You will receive loan funds in two disbursements each semester.
Borrowers who reach forgiveness under the account adjustment will get an email notification by the end of 2023; all other borrowers will be notified in 2024. So if you requested a refund, but you've been in repayment for at least 20 to 25 years, you may be free from your student debt — including the refunded amount.
According to the IRS, student loan amounts forgiven under PSLF are not considered income for tax purposes. Learn more about the PSLF process. You won't be taxed by the federal government, but your state may tax you.
If your claim is approved, you will receive a discharge related to your claim and/or a refund of payments made to ED on those loans. This means you would no longer have to make payments on those loans associated with the school that wronged you, and you may have your past loan payments refunded to you.
Your Financial Aid refund can be used towards any education-related item listed in the cost of attendance such as such as books, transportation, housing, food, and miscellaneous expenses. This also means you are solely responsible for budgeting this refund throughout the semester.
Use the IRS Where's My Refund tool or the IRS2Go mobile app to check your refund online. This is the fastest and easiest way to track your refund. The systems are updated once every 24 hours. You can contact the IRS to check on the status of your refund.
If there are any funds from the grant or student loan disbursements left over after tuition, fees, and room and board are paid, the remaining balance — often called a “credit balance” — will be paid directly to you in the form of cash or check, or else deposited into your bank account.
It is easy to check whether a refund is owed by logging on to the government's Student Loan Company portal, where individual refunds could range from tens of pounds to more than £1,000. Tom Allingham from Save the Student said for many getting a refund could make a world of difference.
The Federal Student Aid (FSA) Website
This web-based resource provides you with access to the details of your federal student loans as well as information about understanding financial aid, applying for aid, and managing loan repayment. Go to studentaid.gov .
The Standard Repayment Plan is the basic repayment plan for loans from the William D. Ford Federal Direct Loan (Direct Loan) Program and Federal Family Education Loan (FFEL) Program. Payments are fixed and made for up to 10 years (between 10 and 30 years for consolidation loans).
If you qualify, you should receive PSLF automatically and get a notification from your student loan servicer. After that, if an overpayment is identified, you can expect a refund within a couple of weeks or up to two months.
Student loan borrowers who are enrolled in the SAVE plan (Saving on a Valuable Education) may have those loans forgiven. If your student loan is eligible for forgiveness, you'll receive a communication from the loan servicers or Department of Education.
Some schools will allow an advance on the student loan refund (meaning the student can get the refund amount before it actually shows on the account), which can be particularly helpful in the beginning of the school year for students that need to cover expenses (e.g. off-campus housing).