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If you have student loans and made payments during the payment pause: March 13, 2020 to December 31,2022, then you may qualify for a refund for the amount you paid. Here are the facts to note-

•        It’s possible to qualify for up to $10,000 in debt relief (or $20,000 to Pell Grant recipients).

•       You must meet the income qualifications for 2020 or 2021 adjusted gross income:

  • Single or married filing separately: $125,000

  • Married filing joint, head of household, or qualifying widow(er): $250,000

• Only federal loans are eligible for the relief.

• Refunds can only be made and given to you, even if someone else made a payment to your loan on your behalf.

• With applying and having the refund:

  • If your current balance is under $10,000 then you will be able to get a cash refund.

  • If your current loan balance is over $10,000 then you will not get an automatic refund, however, you can apply to have $10,000 of your loan debt erased.

  • If you paid off your loan during the pause then you can apply for the refund from your loan servicer and then apply for debt forgiveness (this is because the refund is taken against the loan, essentially recreating it which you then need to have forgiven).

• The application to apply for the relief can be found at: https://studentaid.gov/debt-relief/application

Getting a large refund such as mentioned above could directly affect your tax returns so make sure to keep any records should that occur.  We can provide guidance and clarity on the information provided above.  At Hark and Associates, PC, we are here to provide high quality service with the highest ethical standards in the business of CPA firms.