Comments on: Expanded PSLF Means Huge Refunds for Some Borrowers

By: Michael P. Lux, Esq.

Michael P. Lux, Esq. — Mon, 18 Mar 2024 20:28:44 +0000

In reply to David Moran. The good news for PSLF people is that the forigveness is not taxed at the federal level. Likewise, refunds for overpayments should not get taxed.

By: David Moran

David Moran — Mon, 18 Mar 2024 20:25:43 +0000

Will I owe federal income taxes on the amount of my PSLF refund?

By: Michael P. Lux, Esq.

Michael P. Lux, Esq. — Sat, 30 Sep 2023 19:37:35 +0000

In reply to Amy. That is a great question. If you are eligible for a refund, it should be automatic. However, it wouldn't hurt to reach out to your servicer to confirm eligiblity and to ask about the refund timeline.

By: Amy

Amy — Thu, 28 Sep 2023 18:39:17 +0000

Do you have to request refund or will it be processed after pslf forgiveness?

By: Michael P. Lux, Esq.

Michael P. Lux, Esq. — Fri, 08 Sep 2023 19:44:29 +0000

In reply to Keith. That is a great question, Keith, and an even better point. These companies were making money with each and every extra unnecessary payment that you made. One option might be to file a complaint with the Consumer Financial Protection Bureau about the this issue.

By: Keith

Keith — Fri, 08 Sep 2023 16:48:12 +0000

Was the servicer of a FEEL loan required, under law, to notify you that you made 120 payments and that you may be eligible for debt forgiveness if you consolidate to a direct loan. The PSLF seems like a total shell game. We had made an excess of 120 patments to a feel loan before consolidating and won’t be eligible for refund on excess payments because, surprise surprise, the service never notified us of it, in print or on phone. Miss a payment, though, and they would call and harass us every day.

By: Michael P. Lux, Esq.

Michael P. Lux, Esq. — Fri, 08 Sep 2023 11:59:54 +0000

In reply to C.

It’s possible.

If you had FFEL loans, you won’t get a refund for the payments you made before consolidating them.

Otherwise, I’d think you were justified in getting a refund for the 53 extra payments. The refund amount should be based on the actual amount paid for those extra payments.

Before you get too excited, please keep in mind that it is the last 53 payments, and for many people, that includes the Covid-19 payment and interest pause, so you may have over three years’ worth of $0 payments.

I’d suggest calling your servicer and asking about the refund status and if they know the amount.

By: C

Thu, 07 Sep 2023 22:45:18 +0000

In reply to Michael P. Lux, Esq.. I have had direct or federal loans and consolidated in march 2016 with naviet to help with repayment. Completed PLSF and have worked in public service since 1998 all employers have been certified and been told loans are forgiven with 0.00 and 173 of the 120 payments needed. So does that mean I could receive 53 payments in refund? And if so is that at the monthly payment rate? I am confused by this all. Loans discharged by fed student aid as of 8/18/23.

By: DT

DT — Mon, 17 Jul 2023 18:23:08 +0000

In reply to Michael P. Lux, Esq.. Thank you for the response and insight. I have consolidated direct loans (DL), so I’m assuming MOHELA is currently factoring any amounts that would be owed or refunded. My account shows 332 “eligible” payments, of which 190 are additionally marked as “qualifying” for the TEPSLF.

By: Michael P. Lux, Esq.

Michael P. Lux, Esq. — Mon, 17 Jul 2023 18:12:52 +0000

In reply to DT.

It depends. The biggest factor will be whether or not you had FFEL loans. Payments made toward FFEL loans can benefit from the expanded eligibility, but they are not eligible for refunds.

If your loans are federal direct loans with extra payments, you should have a refund coming.

Your servicer should be able to explain your exact count and refund eligibility.