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Can I Get a Refund on My Children’ Scholar Mortgage Funds? 

Pricey Penny,

I’ve been paying down my federal mother or father pupil loans in the course of the pandemic and haven’t missed a cost. I presently owe about $100,000 for 2 youngsters to attend school. 

I’m additionally retired with earnings coming from my pension, financial savings and Social Safety. Ought to I not have been paying these loans in the course of the pandemic and wait till Oct. 1 to pay? Ought to I nonetheless pay? Postpone cost? I hope there’s some cancelation. 


Pricey L.,

It’s robust to say whether or not on reflection you must have stopped paying these loans. When federal pupil loans had been positioned in computerized forbearance — which means funds and curiosity had been suspended — it was March 13, 2020, which now looks as if a lifetime in the past. It was the start of a really darkish chapter that had no finish in sight.

You made the very best choices you could possibly with the knowledge you had. I’m guessing you stored making funds since you wish to be rid of that debt as quickly as doable, however now with discuss of forgiveness, you’re kicking your self.

I believe you made the proper name to preserve making funds, supplied that you just don’t have interest-accruing debt. Over the previous 14 months, your funds have gone 100% towards the principal.

However should you nonetheless remorse this resolution, this is without doubt one of the uncommon occasions in life the place you get a do-over. You possibly can request a refund for any federal pupil mortgage cost that’s in forbearance by contacting your mortgage servicer. In case you don’t imagine me, try the Coronavirus and Forbearance Info web page on the U.S. Division of Training’s Federal Scholar Help web site.

Asking for a refund could possibly be a superb possibility when you’ve got different high-interest debt, like a bank card steadiness. You can put these mortgage funds towards the interest-accruing debt first after which resume paying off the coed loans. However I don’t suppose pupil mortgage forgiveness ought to be a significant component in your decision-making right here.

Sure, President Joe Biden has supported canceling $10,000 of federal loans per borrower. However he has but to get on board with proposals for forgiving as much as $50,000 of debt, as a handful of progressive Democrats have known as for. Even the $10,000 isn’t near actuality.

I actually wouldn’t financial institution on $50,000 of forgiveness, which is actually what you’d must wipe your slate clear. However should you’re extra optimistic than I’m, the very best resolution is solely to cease making funds for the subsequent 5 months to see how issues shake out.

I wouldn’t spend that cash or make investments it, although. Put it in a checking account in order that it’s protected. If Sept. 30 comes and goes with out forgiveness in sight, then you may make these 5 months of funds in a lump sum earlier than curiosity begins accruing once more.

You don’t say whether or not making these mortgage funds is a pressure in your retirement funds. In case you battle to make funds, you might want to have two conversations.

The primary is together with your pupil mortgage servicer. Relying in your earnings, you might be able to decrease your month-to-month funds by an income-contingent reimbursement plan. You’d must consolidate your Federal Guardian PLUS loans right into a Federal Direct Consolidation mortgage first.

However the greater dialog you might want to have is together with your youngsters. You took on this debt to finance their schooling. So in the event that they’re ready that can assist you out with funds, please ask them. In case your youngsters are nonetheless at school, be trustworthy with them about how a lot debt you will have. They could not be capable of offer you cash for funds proper now, however no less than you possibly can put it on their radar that you just count on them to chip in as soon as they graduate.

Possibly a level of pupil mortgage forgiveness will occur sometime. However for now, you might want to plan as if it’s by no means going to be a actuality.

Robin Hartill is an authorized monetary planner and a senior author at The Penny Hoarder. Ship your difficult cash inquiries to [email protected].

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