Can you still claim student loan forgiveness if your loan is already paid off?

Loan forgiveness — for some

First off, as with so many things in life and finance, timing is everything. With the student loan forgiveness program, if you made or are making payments on eligible loans when the government paused payment requirements and interest accrual (between March 13, 2020 and Dec. 31, 2022) then you fall within the window and qualify for forgiveness.

But debt cancellation is only available for public loans, meaning loans held by the U.S. Department of Education.

To qualify for forgiveness, you’ll have to have made payments during the freeze period and have an eligible public loan.

Per the Federal Student Aid site, certain qualifying loans include:

• Direct loans
• Federal Family Education Loan (FFEL) Program loans held by the U.S. Department of Education (defaulted and non-defaulted)
• Government-held Federal Perkins loans
• Government-held Federal Family Education Loan Program loans
• Some defaulted loans

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What to do if you’ve already paid down your student loan

Any borrower who took advantage of the pause on payments and interest accrual during COVID-19 to pay down their debt can request a refund now. The refunded amount will reappear in your account as a loan balance.

According to the Department of Education, all you need to do is contact your loan servicer to request the refund.

Applications for loan forgiveness are expected to be available by mid-October. But since it could take some time for the change to be reflected in your account, borrowers who want payments refunded should think about starting that process soon.

Claiming student loan forgiveness

Keep in mind that the forgiven amount is capped at what you owe — or owed until you paid it off during the pause. For example, if you have an outstanding loan balance of $6,000 and you qualify for up to $10,000 canceled through the program, your $6,000 loan will be canceled and that’s that.

If you owe $13,000 and qualify for $10,000 canceled through the program, you’ll now have a loan balance of $3,000 after the forgiveness amount is applied.

But let’s say you paid off the last $15,000 on your account before you knew you’d qualify for $10,000 of forgiveness. You can ask for a refund, but keep in mind that by reopening your account, you will have to start repaying that balance — with interest — once the pause ends on Dec. 31.

And since it could take months for the forgiveness to be applied, you could be on the hook for regular payments until that comes through.