NEW YORK (AP)  — When President Joe Biden announced a plan to forgive student loan debt, many borrowers who kept making payments during the pandemic wondered if they'd made the right choice.

Borrowers who paid down their debt during a pandemic freeze that started in March 2020 can, in fact, get a refund — and then apply for forgiveness – but the process for doing that hasn’t always been clear.

If you think you’re eligible, here’s what you need to know:

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WHO IS ELIGIBLE FOR A REFUND?

Borrowers who hold eligible federal student loans and have made voluntary payments since March 13, 2020, can get a refund, according to the Department of Education.

For some people, that refund will be automatic. You can get a refund without applying if your payments brought your loan balance below the maximum debt relief amount: $10,000 for all borrowers and $20,000 for Pell Grant recipients. Borrowers can check their balance in their studentaid.gov account.

For example, if a borrower paid $100 a month for 10 months of the pandemic and their balance is now $8,000, that $1,000 will automatically be refunded. Then they can apply to get the rest of their debt forgiven.

But if a borrower paid throughout the pandemic and still owes $14,000, they won’t get an automatic refund. They can, however, apply to have $10,000 of that debt erased.

Another group of people that has to apply for a refund is those who completely paid off their loan balance during the pandemic. If that’s you, you’re eligible for loan forgiveness, but you’ll have to request a refund prior to applying for debt relief. Borrowers should confirm their eligibility for the loan forgiveness program prior to requesting a refund.

For example, if a borrower had $5,000 in debt at the start of the pandemic and paid it all back during the freeze but is eligible for up to $10,000 in forgiveness, they would apply for a $5,000 refund, then apply to have their debt forgiven.

“Borrowers who paid off their loans during the pause will need to request a refund first, then request cancellation,” said a spokesperson from the Department of Education.

The refund is not available for private student loans.

Eligible federal student loans:

—Direct Loans (defaulted and non-defaulted)

—Federal Family Education Loan (FFEL) Program loans held by ED (defaulted and non-defaulted)

—Federal Perkins Loans held by ED (defaulted and non-defaulted)

—Defaulted FFEL Program loans not held by ED

—Defaulted HEAL loans

If you are not sure which loan you have, visit your dashboard at studentaid.gov and find the “my loan servicers” section. If you can’t access your dashboard, you can call the Federal Student Aid office at 1-800-433-3243 to ask for loan servicer information.

HOW CAN I APPLY FOR A REFUND?

Borrowers who want a specific amount refunded can apply by calling their loan service provider. Right now, refunds are only being done via phone and not through any website or email.

When the Biden Administration announced the forgiveness, loan servicers found themselves inundated with calls. But many borrowers now say they’re not waiting long when calling.

“I was on hold for about five minutes,” said Megan McParland, of New Jersey, who graduated in 2018 and made several payments during the payment freeze.

McParland requested a refund the first week of September. At first, she felt the servicer tried to dissuade her from making the request. But after confirming that she wanted to proceed, she was told that she would see her refund in about a month.

Sierra Tibbs, a 47-year-old resident of Casselberry, Florida, had a similar experience. The entire phone call with her loan servicer took around 20 minutes.

Tibbs applied for a refund after seeing a video online informing her that she could get back money she paid during the pandemic.

If you are unsure who services your loan or if the servicer changed during the pandemic, visit your student aid account dashboard and scroll to “my loan servicers” or call 1-800-433-3243.

Before calling your loan provider to request your refund, you need to know your account number and the amount you want to be refunded.

—Loan servicers’ phone numbers:

FedLoan Servicing: 1-800-699-2908

Great Lakes Educational Loan Services, Inc.: 1-800-236-4300

Edfinancial: 1-855-337-6884

MOHELA: 1-888-866-4352

Aidvantage: 1-800-722-1300

Nelnet: 1-888-486-4722

OSLA Servicing: 1-866-264-9762

ECSI: 1-866-313-3797

Default Resolution Group: 1-800-621-3115 (1-877-825-9923 for the deaf or hard of hearing)

HOW WILL THE REFUND WORK — AND WHEN WILL MY LOANS BE FORGIVEN?

When you request a refund, the amount that you have paid during the payment freeze will be added back to your student loan balance, said Katherine Welbeck, Civil Rights Counsel for the Student Borrower Protection Center.

That amount is still eligible for cancellation and can be eliminated after you apply for forgiveness.

You're eligible for debt relief if you had an annual federal income below $125,000 individually or $250,000 if you're married or head of household in 2020 or 2021. The application is expected to open in early October, and you can apply until Dec. 31, 2023.

It is unclear when borrowers will see debt relief. So far, the plan only mentions borrowers will be notified by their loan servicer when their debt is forgiven. There is also a possibility that forgiveness could be delayed if the Biden administration faces legal challenges.

Laura Baum, a 30-year-old resident of Chicago, paid $5,000 during the payment freeze toward her $15,000 remaining debt. She is eligible to have $20,000 canceled since she was a Pell grant recipient when she was an undergraduate. At the beginning of September, Baum called her loan servicer and asked for a refund.

But because of the uncertainty, she plans to save that money until the Department of Education confirms her debt has been canceled.

“I’m going to hold on to that refund until I absolutely see $0 in my student loans,” Baum said.

WHEN IS THE DEADLINE TO APPLY?

The deadline to apply for a refund is December 31, 2023. However, Welbeck recommends applying for a refund before applying for debt forgiveness.

“If you apply first, you can process the refund to get your money back, and then that balance in your account is canceled,” Welbeck said.

The application process for loan forgiveness is expected to take four to six weeks.

The Department of Education offers a subscription page where you can sign up to be notified when the application is open.

HOW MUCH CAN I GET REFUNDED?

According to the Department of Education, you can get a refund for the entire amount you paid during the payment freeze. 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. You could get a partial refund, then apply to have your remaining debt wiped out.

Say you had $15,000 worth of debt remaining at the beginning of the payment freeze and have since paid $8,000 but qualify for $10,000 in debt relief. You might decide to ask for a refund of just $3,000. Then, your debt balance will be exactly $10,000, and you can apply for maximum loan forgiveness.

WHEN WILL I GET MY REFUND?

Borrowers should expect to receive their refund six to 12 weeks after requesting it, according to the Department of Education. But you might want to double-check with your loan servicer.

McParland’s loan servicer told her that she should see her refunded amount in 30 to 45 business days, but Baum was told that it would take 60 to 70 business days to see her money back in her bank account.

IS THE REFUND TAXABLE INCOME?

It is not yet clear if the refunded money will be considered taxable income. Welbeck recommends borrowers check with financial advisers from their own state.

Some states, such as Indiana, have already said they will tax debt relief for people who have their student loans canceled. Policies vary from state to state.

DOES THE REFUND AFFECT MY CREDIT SCORE?

Since the Department of Education has not yet announced how the cancellation or refunds will be reported to the credit bureaus, it is still uncertain if these amounts will affect borrowers’ credit scores, said Welbeck.

SHOULD I START PAYING AGAIN WHEN THE PAYMENT FREEZE ENDS?

The pandemic payment freeze is set to end on Dec. 31. If you have not seen debt relief by then, you are still expected to start making payments. Welbeck recommends that borrowers enroll in income-driven repayment plans before the end of the payment freeze.

Income-driven repayment plans allow you to set an affordable payment amount based on income and family size.

You can find more information about the four types of income-driven repayment plans here.

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You can find all of AP's financial wellness coverage at https://apnews.com/hub/financial-wellness.

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The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.

Markets sold off worldwide on mounting signs the global economy is weakening just as central banks raise the pressure even more with additional hikes to interest rates. The Dow Jones Industrial Average closed at its lowest point of the year Friday. The S&P 500 fell 1.7%, close to its 2022 low. Energy prices also closed sharply lower as traders worried about a possible recession—Treasury yields, which affect rates on mortgages and other kinds of loans, held at multiyear highs. U.K. government bond yields snapped higher after that country's new government announced a sweeping plan of tax cuts.

Stocks tumbled worldwide Friday on more signs the global economy is weakening, just as central banks raise the pressure even more with additional interest rate hikes.

The S&P 500 fell 2% in afternoon trading, adding a dismal cap on what's already been a rough week. It's close to its low point of the year in mid-June.

European stocks fell just as sharply or more after preliminary data there suggested business activity had its worst monthly contraction since the start of 2021. Adding to the pressure was a new plan announced in London to cut taxes, which sent U.K. yields soaring because it could ultimately force its central bank to raise rates even more sharply.

The Federal Reserve and other central banks around the world aggressively hiked interest rates this week to undercut high inflation, with more big increases promised for the future. But such moves also brake their economies, threatening recessions as growth slows worldwide. Besides Friday's discouraging data on European business activity, a separate report suggested U.S. activity is also still shrinking, though not quite as bad as in earlier months.

"Financial markets are now fully absorbing the Fed's harsh message that there will be no retreat from the inflation fight," Douglas Porter, chief economist at BMO Capital Markets, wrote in a research report.

Crude oil prices tumbled to their lowest levels since early this year on worries that a weaker global economy will burn less fuel. Cryptocurrency prices also fell sharply because higher interest rates tend to hit hardest the investments that look the priciest or the riskiest.

Even gold fell in the worldwide rout, as bonds paying higher yields make investments that pay no interest look less attractive. Meanwhile, the U.S. dollar has been moving sharply higher against other currencies. That can hurt profits for U.S. companies with lots of overseas business, as well as put a financial squeeze on much of the developing world.

The Dow Jones Industrial Average fell 505 points, or 1.7%, to 29,572 and the Nasdaq fell 1.9% as of 3:43 p.m. Eastern. Smaller company stocks did even worse. The Russell 2000 fell 3%. U.S. crude oil prices slid 5.7% and weighed heavily on energy stocks.

More than 90% of stocks in the S&P 500 were in the red, with technology companies, retailers and banks among the biggest weights on the benchmark index. The major indexes are on pace for their fifth weekly loss in six weeks.

The Federal Reserve on Wednesday lifted its benchmark rate, which affects many consumer and business loans, to a range of 3% to 3.25%. It was at virtually zero at the start of the year. The Fed also released a forecast suggesting its benchmark rate could be 4.4% by the year's end, a full point higher than envisioned in June.

Treasury yields have climbed to multiyear highs as interest rates rise. The yield on the 2-year Treasury, which tends to follow expectations for Federal Reserve action, rose to 4.19% from 4.12% late Thursday. It is trading at its highest level since 2007. The yield on the 10-year Treasury, which influences mortgage rates, slipped to 3.68% from 3.71%.

The higher rates mean Goldman Sachs strategists say most of their clients now see a "hard landing" that pulls the economy sharply lower as inevitable. The question for them is just on the timing, magnitude and length of a potential recession.

Higher interest rates hurt all kinds of investments, but stocks could stay steady as long as corporate profits grow strongly. The problem is that many analysts are beginning to cut their forecasts for upcoming earnings because of higher rates and worries about a possible recession.

"Increasingly, market psychology has transitioned from concerns over inflation to worries that, at a minimum, corporate profits will decline as economic growth slows demand," said Quincy Krosby, chief global strategist for LPL Financial.

In the U.S., the jobs market has remained remarkably solid, and many analysts think the economy grew in the summer quarter after shrinking in the first six months of the year. But the encouraging signs also suggest the Fed may have to jack rates even higher to get the cooling needed to bring down inflation.

Some key areas of the economy are already weakening. Mortgage rates have reached 14-year highs, causing sales of existing homes to drop 20% in the past year. But other areas that do best when rates are low are also hurting.

In Europe, meanwhile, the already fragile economy is dealing with the effects of war on its eastern front following Russia's invasion of Ukraine. The European Central Bank is hiking its key interest rate to combat inflation even as the region's economy is already expected to plunge into a recession. And in Asia, China's economy is contending with still-strict measures meant to limit COVID infections that also hurt businesses.

While Friday's economic reports were discouraging, few on Wall Street saw them as enough to convince the Fed and other central banks to soften their stance on raising rates. So they just reinforced the fear that rates will keep rising in the face of already slowing economies.

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Economics Writer Christopher Rugaber and Business Writers Joe McDonald and Matt Ott contributed to this report.

With inflation at its highest levels in four decades, it comes as no surprise that Americans are tapped out of their savings and relying on credit cards.

According to a Bankrate survey, 36 percent of Americans started the year with more credit card debt than savings. Bankrate said 36 percent set a record since it began conducting the survey in 2011.

Baby boomers were most likely to have savings that exceeded credit card debt, while millennials were most likely to have credit card debt that exceeds savings.

In January 2022, 22 percent of those surveyed had more credit card debt than savings, which was down from 28 percent in January 2020.

A slim majority of Americans, 51 percent, said they had more savings than credit card debt. The survey found that 13 percent had no credit card debt or savings.

“It is quite stunning that such a high percentage of adults has no savings and no credit card debt,” Bankrate senior economic analyst Mark Hamrick said in a press release. “Anyone with no such savings, including those without access to credit, risks tremendous stress, or worse, on their personal finances when hit with a significant unplanned expense such as a major home or auto repair.”

Although 39 percent of Americans said they have less in emergency savings than a year ago, 26 percent reported having more.

This article provides information and education for investors. NerdWallet does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks or securities.

Why aren’t you investing?

Maybe you grew up thinking the stock market was a scam. Maybe you’re worried that you’ll lose all your money. Maybe you think you don’t have enough to start. Many Americans remain uninvested, even though it can hurt their long-term financial future. According to a 2019 Pew Research Center survey, only about 35% percent of U.S. adults said they personally owned stocks, bonds or mutual funds outside of retirement accounts.

While the system may have originally been built to benefit the few, it is growing to accommodate the needs of the many. No matter what your reason for avoiding investing is, you can begin with confidence after busting these stock market myths.

Myth #1: I need to know about the stock market to start investing

If you’re worried that you don’t know enough about investing to get started, consider this: The people who trade stocks frequently, confidently swapping Amazon for Apple when they see fit, rarely “beat the stock market.” Often, buying a simple index fund and letting it grow over time will make you more money, financial advisors say. So don’t worry that a limited investing knowledge will hold you back.

Having a cautious attitude when it comes to investing can be beneficial and keep you from making any rash decisions. Learning how to invest is easier than you might think, and definitely does not involve being an investing expert.

It’s getting started as soon as you can that is key, says Chloe Moore, a certified financial planner and founder of Financial Staples in Atlanta.

“Investing is an important tool for building wealth,” says Moore. “We all want our money to work for us, and investing plays a key role in this. The earlier you invest, the more time your money has to grow.”

Myth #2: The system isn’t meant for me

Different factors contribute to the belief that the stock market isn’t for everyone. Some people might feel this way because they can’t find a financial advisor who looks like them. Maybe it’s because of an inherited distrust or a lack of confidence in managing money, or maybe it’s a fear of discrimination. Maybe they just don’t think they have enough money to start.

These concerns are real, but there are more tools than ever to help people learn about personal finance and start investing. Groups such as the Association of African American Financial Advisors can help investors connect with advisors of color.

Robo-advisors are another option, and they’re a great way to get started investing, Moore says. They use computer algorithms to choose and manage your investments for you, no matter how much money you have (and often for a fraction of the cost of a traditional financial advisor). Ellevest is a robo-advisor that specializes in helping women invest. (Ellevest is a NerdWallet advertising partner).

“These automated online investment platforms can help you find the right mix of assets for your goals and risk tolerance,” Moore says. “They also rebalance your account on a regular basis, and some will optimize your portfolio for tax efficiency.”

Myth #3: If I open an investment account, I’m invested

Just like a checking or savings account, just because you’ve opened an account doesn’t mean you’ve put money in it.

Some investment accounts have a minimum initial deposit, but many do not, meaning you can open an account with $0.

Once you open the account, you’ll need to add money before you can start buying investments. If you’re not ready to commit your dollars to the stock market just yet, you can still dip your toes in the water by opening an account for free. There are even stock market simulators you can use to practice investing before you do it for real.

Myth #4: I’ll probably lose all my money

While this is technically true, it’s highly unlikely. Short term variations in the stock market may make your investment account’s balance go up or down. But if you have a diversified portfolio (which may include low-cost index funds) and hold on to those investments for the long-term, there is a greater possibility for growth over time.

Myth #5: I have to pay for a financial advisor

Just because someone is a professional doesn’t mean they can predict the stock market. A financial advisor may come in handy if your financial life is getting more complicated and you need some help with retirement or estate planning, but otherwise, using a robo-advisor or choosing investments yourself works just fine for most investors.

Disclosure: The author held no positions in the aforementioned securities at the time of publication.

More From NerdWallet

Alana Benson writes for NerdWallet. Email: abenson@nerdwallet.com.

The state of Rhode Island will soon require all students at public high schools to pass financial literacy classes for graduation.

Earlier this month, Rhode Island Gov. Dan McKee, a Democrat, signed a bill into law that will set statewide standards for classes that will teach students about financial literacy.

According to a press release from the governor's office, the goal of the law is to educate Rhode Island students on personal finance topics ranging from budgeting, saving, employment and income and money management.

"Financial literacy is key to a young person's future success," McKee said in a statement. "...(this legislation will) help us ensure that every Rhode Island high school student is equipped with tools to prepare them for economic opportunity after graduation."

The bill, which was signed into law on June 9, at a ceremony at a Pawtucket high school, instructs the state Council on Elementary and Secondary Education to work with the Rhode Island Department to set statewide standards for students.

The law orders standards to be set by the end of 2021 and orders that the classes be offered in public schools by the start of the 2022-2023 school year.

"How can we expect our children to become financially successful adults if we do not teach them the core aspects of our financial system when they are in school?" said Democratic state Sen. Sandra Cano, who chairs the Rhode Island Senate Education Committee. "This bill will ensure that our children leave the public school system with a firm and knowledgeable grasp on basic financial concepts that will help them succeed in their adult lives."

The new law follows a 2019 Treasury Department report that recommended mandatory financial literacy courses for college students.

In February 2020, CNBC reported that just six states in the U.S. required students to take a stand-alone personal finance class — Alabama, Iowa, North Carolina, Tennessee, Utah and Virginia.