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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Dr. Richelle Brooks has between $230,000 and $250,000 in student loan debt. She says she’s been in higher education since graduating high school.

“[I have] an associate's in nursing, bachelor's degree in behavioral science, master's degree in sociology, master's degree in teaching curriculum and instruction, a teaching credential in science, a teaching credential in math, a doctorate in education and an administrative credential," Brooks said. "And the last program that I was enrolled in was a certificate for IT.”

She says she feels forced to stay in school because it's the only way to delay her student loan payments.

“As soon as I get that bill saying, 'Hey, your student loans would be due in six months,' I go find another place to go to school in another degree to attain," Brooks said. "I can't pay it.”

Brooks was raised by a single mother in a poor community, and she says she thought taking out lots of loans was normal because that’s how she and her mother survived.

“There was no way out other than borrowing money from where I was in that moment," Brooks said. "You know, I didn't have any guidance and I think that's common with first-generation college students. There's really no blueprint. There's not a lot of people that know what you're doing.”

Despite the debt, she loves and values her education.

“We have knowledge and access to knowledge," Brooks said. "We're bettering ourselves which is good for society.”

Now she’s a single mother and a principal. She says she's not making enough money to pay off her growing debt, but her situation isn’t rare.

Dr. Jalil Mustafa Bishop is an associate professor of education at Villanova University.

“I study issues of racial justice and movement building in higher education with a particular focus on the student debt crisis,” Bishop said.

Bishop recently put together a report that focuses on the experiences of Black students when it comes to their student loan debt.

“Sixty-six percent of those who respond to our survey regretted their student loans, almost half reported not experiencing a positive return," Bishop said. "In an interview, they explained that student debt often was not a choice. They felt like they made something that they were required to do if they wanted to experience mobility if they wanted to access higher education and have an opportunity at some of the promises that we say will come with borrowing student loans and earn your credentials.”

Bishop points to income-based repayment plans as part of the problem.

“Black borrowers were having their payments adjusted so that they were 'affordable', but their payments weren't enough to actually cover both interest and principal, so they were making payments for 10 or 20 years, but still seeing their student debt balance grow each year while struggling to manage their payments,” Bishop said.

Black borrowers refer to these payment plans as a lifetime debt sentence.

“When we look at black students 20 years out, they still owe about 95 percent of the student debt balance," Bishop said. "When we look at white students 20 years out, they have actually paid down 93 percent of their student debt.”

Dr. Armen Henderson works with Jalil as part of the Debt Collective, a membership-based union that aims to transform the individual financial struggle.

“It was just the narrative is that if you want to pull yourself up by your bootstraps, you have to go to school and that the jobs will be there, the recession will be over, etc.," Henderson said. "And it wasn't, it wasn't like that.”

Henderson says Black communities have to work even harder to become successful.

“I worked while I was in medical school," Henderson said. "I was on food stamps when I was in medical school and, you know, my dad became homeless and my brother became homeless when I was in medical school.”

He is the first in his family to become a physician, but he is also $250,000 dollars in debt.

He says he’s unable to make significant payments on that debt because he needs to support his family.

“Now, when I when I go to apply for a loan for a house and things of that nature or to start a business and things, you know, people are looking at this heavy amount of debt that I have over my shoulders,” Henderson said.

Henderson and Brooks are both calling for debt cancellation to repair what they see as a racial injustice. However, neither of them regrets their degrees.

“There is a need, definitely, for Black academics," Henderson said. "It is definitely needed. I just think it costs too much.”
 

The government’s small business lending program has benefited millions of companies, with the goal of minimizing the number of layoffs Americans have suffered in the face of the coronavirus pandemic. Yet the recipients include many you probably wouldn’t have expected.

Kanye West’s clothing line. The sculptor Jeff Koons. Law firms and high-dollar hedge funds. The Girl Scouts. Political groups on both the left and right.

All told, the Treasury Department’s Paycheck Protection Program authorized $520 billion for nearly 5 million mostly small businesses and nonprofits. On Monday, the government released the names and some other details of recipients who were approved for $150,000 or more.

That amounted to fewer than 15% of all borrowers. The Associated Press and other news organizations are suing the government to obtain the names of the remaining recipients.

Economists generally credit the program with preventing the job market meltdown this spring from becoming even worse. More than 22 million jobs were lost in March and April. But roughly one-third of them were regained in May and June — a faster rebound than many analysts had expected.

The government acted quickly in early April, with Treasury lending the first $349 billion in just two weeks. The program got off to a rocky start, one marked by confusion and difficulty for many companies that sought loans.

“The process was messy, and they couldn’t target it as much,” Diane Swonk, chief economist at accounting firm Grant Thornton, said of Treasury.

Here are seven unlikely recipients of the PPP loans:

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JEFF KOONS

Koons, a modernist sculptor, is known best for his work with large, metallic balloon-like animals. His “Rabbit” sculpture fetched $91 million at auction last year.

Koons’ studio was approved for $1 million to $2 million, the government’s data shows. (The data shows only ranges for the amounts of approved loans.) His studio said it employed 53 people before the pandemic. The PPP loans can be forgiven if employers use most of the money to keep their workers on the payroll.

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WALL STREET AND PRIVATE EQUITY

Nearly 600 asset management companies and private equity firms were approved for money from the PPP, according to government data.

Financial firms were generally not badly hurt by the coronavirus pandemic. Their employees were largely able to keep working, and they weren’t among the industries that had to be shut down by government orders. In addition, of course, investment managers and private equity employees tend to be exceedingly well-paid occupations.

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According to the data, those 583 companies reported supporting roughly 14,800 jobs collectively with the money from the program. That’s an average of 25 employees per company.

One other notable financial company that borrowed from the program: Rosenblatt Securities, which commands one of the largest physical presences on the floor of the New York Stock Exchange. Rosenblatt borrowed between $1 million and $2 million.

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KANYE WEST’S CLOTHING LINE

Kanye West’s clothing-and-sneaker brand Yeezy received a loan of between $2 million and $5 million, according to the data released by Treasury. The company employed 106 people in mid-February before the pandemic struck.

Yeezy, best known for its $250 sneakers, just announced a major deal with Gap that will have the rap superstar designing hoodies and T-shirts to be sold in the chain’s 1,100 stores around the world. (A representative for Yeezy didn’t immediately respond to a request for comment.)

Last weekend, West, a notable fan of President Donald Trump, tweeted that he was running for president.

Some other well-known fashion and retail names whose businesses were pummeled by store shutdowns were also approved for loans. The list included high-end designers Oscar de la Renta and Vera Wang and suit maker Hickey Freeman. All their loans were in the $2-million-to-$5 million range.

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POLITICAL GROUPS

The Americans for Tax Reform Foundation, the nonprofit arm of the anti-tax lobbying group Americans for Tax Reform, was approved for a loan of up to $350,000. ATR, led by the anti-tax activist Grover Norquist, who has long supported a smaller federal government, said it didn’t oppose the PPP. It described the program “as compensation for a government taking during the shutdown.”

The Center for Law and Social Policy, a research and advocacy group focused on policies supporting low-income Americans, was authorized for a loan of up to $1 million, according to government data.

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THE GIRL SCOUTS

More than 30 Girl Scout chapters across the country received PPP loans, the Treasury said. The Girl Scouts of Montana and Wyoming were approved for between $350,000 and $1 million.

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JIM JUSTICE, BILLIONAIRE GOVERNOR

West Virginia Gov. Jim Justice’s family companies received at least $6.3 million from the program.

Justice, a Republican, is considered to be West Virginia’s richest person through his ownership of dozens of coal and agricultural businesses, many of which have been sued for unpaid debts. At least six Justice family businesses were approved for loans, including The Greenbrier Sporting Club, an exclusive club attached to a lavish resort that Justice owns called The Greenbrier.

Justice, a billionaire, acknowledged last week that his private companies received money from the program but said he didn’t know the dollar amounts. A representative for the governor’s family companies didn’t immediately return emails seeking comment.

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RESTAURANT CHAINS

TGI Fridays and P.F. Chang’s China Bistro were among the major restaurant chains that were approved for loans.

Dallas-based TGI Fridays, which has around 500 restaurants nationwide, obtained between $5 million and $10 million in loans from the program. In 2014, TGI Fridays was bought by the the New York private equity firm TriArtisan Capital Advisors. That firm also owns P.F. Chang’s China Bistro, which was also approved for a loan.

Though the PPP program was designed to help small businesses, big hotel and restaurant chains were also allowed to apply. A message seeking comment was left with TGI Fridays.

P.F. Chang’s China Bistro says a PPP loan helped it keep 12,000 workers employed and transition its restaurants to carry-out-only during the coronavirus pandemic. Scottsdale, Arizona-based P.F. Chang’s, which has more than 210 restaurants around the country, was approved for between $5 million and $10 million from the PPP program, according to the government data.

MILWAUKEE, Wis. — President Joe Biden said Tuesday that he won’t be canceling $50,000 of student loan debt for borrowers, as has been proposed by other top Democrats.

When asked about the matter during his first presidential town hall with CNN, Biden said, “I will not make that happen.”

Though, during his campaign for the presidency, Biden did say that he supports canceling up to $10,000 in federal student loan debt and he reiterated that during the town hall.

"My point is: I understand the impact of debt, and it can be debilitating," Biden said. "I am prepared to write off the $10,000 debt, but not [$50,000], because I don't think I have the authority to do it."

The president said he would consider a program in which student loan debt is forgiven for those who give back to their communities.

"In terms of student debt that's accumulated, is provide for changing the existing system now for debt forgiveness if you engage in volunteer activity,” said Biden. “For example, if you're teaching school, after five years, you'd have $50,000 of your debt forgiven. If you worked in a battered women's shelter, you'd be able to forgive debt."

The Biden administration has said canceling more debt than that would take congressional action.

“The President continues to support the cancelling of student debt to bring relief to students and families,” tweeted White House Press Secretary Jen Psaki. “Our team is reviewing whether there are any steps he can take through executive action and he would welcome the opportunity to sign a bill sent to him by Congress.”

Earlier this month, congressional Democrats released a plan that seeks to forgive up to $50,000 in federal student loans per borrower. They called on Biden to make it happened through executive action.

Senate Majority Leader Chuck Schumer and Sen. Elizabeth Warren are two of lawmakers advocating for $50,000. Wednesday, they responded to Biden’s town hall comments with a joint statement.

“Presidents Obama and Trump used their executive authority to cancel student loan debt,” they wrote. The Biden administration has said it is reviewing options for cancelling up to $50,000 in student debt by executive action, and we are confident they will agree with the standards Obama and Trump used as well as leading legal experts who have concluded that the administration has broad authority to immediately deliver much-needed relief to millions of Americans. An ocean of student loan debt is holding back 43 million borrowers and disproportionately weighing down Black and Brown Americans. Cancelling $50,000 in federal student loan debt will help close the racial wealth gap, benefit the 40% of borrowers who do not have a college degree, and help stimulate the economy. It’s time to act. We will keep fighting.”