30 Facts About Student Loan Refund

Impact of the Pandemic on Student Loan Payments

The COVID-19 pandemic brought significant changes to student loan payments. Let's explore how it affected borrowers.

1. The pandemic led to a pause on student loan payments, extended multiple times, impacting around 35 million borrowers.
2. Federal student loan payments resumed in October 2023 after a long pause.
3. As of January 2024, the Education Department held $1.5 trillion in federal loans for nearly 43 million borrowers.

Borrower Repayment Status

Understanding the repayment status of borrowers can shed light on the broader impact of student loan debt.

4. About half of the borrowers whose loans had entered repayment and weren't in default were current on their payments, totaling about $706 billion in loans.
5. Nearly 30% of borrowers were past due, accounting for about $290 billion in loans.
6. The rest were not expected to make payments due to deferment or forbearance.

Credit Reporting and Income-Driven Repayment Plans

Credit reporting and repayment plans are crucial aspects of managing student loan debt.

7. The Department of Education typically reports borrowers as delinquent to credit reporting agencies when they become 90 days past due. However, for the first 12 months of repayment resumption (October 2023 to September 2024), this practice is being forgone.
8. Income-Driven Repayment (IDR) plans, such as the SAVE plan, offer borrowers lower payments tied to a percentage of their discretionary income (generally 10–15%).
9. As of January 2024, nearly a quarter of borrowers in repayment (7.3 million) were enrolled in IDR plans, with 60% of those in the SAVE plan scheduled to pay $0.

Student Loan Debt Statistics

Let's dive into some key statistics about student loan debt.

10. As of 2021, less than 2% of private student loans entered default.
11. 55% of Americans supported cancellation of up to $10,000 per borrower in federal student loans.
12. Only 34% of student borrowers owed $10,000 or less in federal debt, and 79% owed $40,000 or less.

Default Rates and Myths

Default rates are often misunderstood. Here are some facts to clarify.

13. The cohort default rate (CDR) is a measure used by the U.S. Department of Education to track default rates among federal student loan borrowers.
14. Many law schools boast low default rates, often citing the CDR. However, this metric only measures defaults within the first three years of repayment.
15. IDR plans have been instrumental in managing student loan debt, providing a useful tool for law graduates to manage their debt effectively.

Refund Checks and Their Impact

Refund checks were a significant aspect of the pandemic pause. Here's what you need to know.

16. Only borrowers who requested refund checks received them. Refunds were not automatic.
17. Borrowers who received refund checks are now liable for their full student debt balance, including any refunded amount.
18. Borrowers can consider using the refunded amount to make a lump sum payment on their student loan balance.

Long-Term Borrowers and Overpayments

Long-term borrowers have unique considerations regarding refunds and overpayments.

19. Borrowers who have been in any repayment plan for at least 20 to 25 years will see their remaining student loan balance erased entirely under the IDR account adjustment.
20. If you are a longtime borrower and your loan balance is forgiven under the IDR account adjustment, you may receive a refund for any overpayments made beyond 20 or 25 years.

Federal Student Loan Debt and Demographics

Federal student loan debt affects various demographics differently. Let's look at some key points.

21. The federal government loans an annual total of $82.026 billion to all postsecondary students.
22. 53.6% of federal student loan debt is in Stafford Loans, with 18% in subsidized Stafford loans and 35.6% in unsubsidized Stafford loans.
23. Detailed demographic reports show that 54.1% of independent undergraduate students accepted federal student loans.

Student Loan Debt Among Different Demographics

Different demographics experience student loan debt in unique ways.

24. 66% of Pell Grant recipients came from families that made $30,000 or less annually in 2019-2020.
25. The Education Department estimates that 87% of relief dollars will go to people making less than $75,000 per year.

Cancellation Benefits and Public Support

The potential benefits of student loan cancellation have garnered public support.

26. The Biden Administration's student debt cancellation plan will benefit young and old student loan borrowers.
27. A slim majority of Americans support cancellation of up to $10,000 per borrower in federal student loans, with 55% in favor.

Default Rates Among Different Institutions

Default rates vary significantly among different types of educational institutions.

28. 9% of borrowers who attended public institutions were behind on their payments in May 2020.
29. Less than 2% of private student loans entered default as of 2021's fourth financial quarter.
30. Payments made on some FFEL Program or Perkins loans were not eligible for refunds during the pandemic pause.

Managing Student Loan Refunds

Understanding student loan refunds is crucial for navigating your financial future. The pandemic pause on payments offered temporary relief, but with repayments resuming, borrowers must face their full balances, including any refunded amounts. Income-Driven Repayment (IDR) plans can help manage monthly payments by tying them to your income. If you've been in repayment for 20-25 years, you might see your remaining balance forgiven, potentially receiving refunds for overpayments.

Be aware of how refunds impact your financial goals. Consider using refunded amounts for lump sum payments to reduce interest. Stay informed about ongoing litigation and legislative changes that could affect your repayment strategy. By understanding these key points, you can better manage your student loan debt and make informed financial decisions.