• Discounts and special offers
  • Subscriber-only articles and interviews
  • Breaking news and trending topics

Already a subscriber?

By signing up, you accept Moneywise's Terms of Use, Subscription Agreement, and Privacy Policy.

Not interested ?

Loan forgiveness — for some

First off, as with so many things in life and finance, timing is everything. With the student loan forgiveness program, if you made or are making payments on eligible loans when the government paused payment requirements and interest accrual (between March 13, 2020 and Dec. 31, 2022) then you fall within the window and qualify for forgiveness.

But debt cancellation is only available for public loans, meaning loans held by the U.S. Department of Education.

To qualify for forgiveness, you’ll have to have made payments during the freeze period and have an eligible public loan.

Per the Federal Student Aid site, certain qualifying loans include:

  • Direct loans
  • Federal Family Education Loan (FFEL) Program loans held by the U.S. Department of Education (defaulted and non-defaulted)
  • Government-held Federal Perkins loans
  • Government-held Federal Family Education Loan Program loans
  • Some defaulted loans

Discover the power of FreeCash – your ticket to easy money

Dive into a world of rewards at FreeCash where earning cash is as simple as a click. No gimmicks, just real cash for your time. Join the community of earners today and watch your wallet grow effortlessly.

Make Money Now

What to do if you’ve already paid down your student loan

Any borrower who took advantage of the pause on payments and interest accrual during COVID-19 to pay down their debt can request a refund now. The refunded amount will reappear in your account as a loan balance.

According to the Department of Education, all you need to do is contact your loan servicer to request the refund.

Applications for loan forgiveness are expected to be available by mid-October. But since it could take some time for the change to be reflected in your account, borrowers who want payments refunded should think about starting that process soon.

Claiming student loan forgiveness

Keep in mind that the forgiven amount is capped at what you owe — or owed until you paid it off during the pause. For example, if you have an outstanding loan balance of $6,000 and you qualify for up to $10,000 canceled through the program, your $6,000 loan will be canceled and that’s that.

If you owe $13,000 and qualify for $10,000 canceled through the program, you’ll now have a loan balance of $3,000 after the forgiveness amount is applied.

But let’s say you paid off the last $15,000 on your account before you knew you’d qualify for $10,000 of forgiveness. You can ask for a refund, but keep in mind that by reopening your account, you will have to start repaying that balance — with interest — once the pause ends on Dec. 31.

And since it could take months for the forgiveness to be applied, you could be on the hook for regular payments until that comes through.

Sponsored

Kiss your credit card debt goodbye

Millions of Americans are struggling to crawl out of debt in the face of record-high interest rates. A personal loan offers lower interest rates and fixed payments, making it a smart choice to consolidate high-interest credit card debt. It helps save money, simplifies payments, and accelerates debt payoff. Credible is a free online service that shows you the best lending options to pay off your credit card debt fast — and save a ton in interest.

Chris Clark Freelance Contributor

Chris Clark is freelance contributor with MoneyWise, based in Kansas City, Mo. He has written for numerous publications and spent 18 years as a reporter and editor with The Associated Press.

Disclaimer

The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter. Advertisers are not responsible for the content of this site, including any editorials or reviews that may appear on this site. For complete and current information on any advertiser product, please visit their website.

†Terms and Conditions apply.