It’s the announcement borrowers have been waiting on since the news about federal student loan cancellation first broke – millions with federal student loans will now receive automatic refunds on loan payments made during the pandemic. The U.S. Department of Education recently shared this latest development in federal relief last week, effectively answering the question of whether or not payments made during the student loan pause would be included in President Biden’s plan to cancel student debt.

With over 9 million people having made at least one payment on their federal student loans during the pandemic, reimbursements will make sure borrowers receive the exact amount of cancellation they’re eligible for. CNBC detailed eligibility requirements in a recent report:

“Payments made since March 2020 on federal student loans eligible for the pause should now be refundable, higher education expert Mark Kantrowitz told CNBC. Commercially held Federal Family Education Loans (FFEL), however, which were not eligible for the pause, won’t be eligible for the refund.

Per the department’s website, those who are eligible for debt cancellation will automatically receive a refund if:

You successfully apply for and receive debt relief under the Administration’s debt relief plan, AND

Your voluntary payments during the payment pause brought your balance below the maximum debt relief amount you’re eligible to receive but did not pay off your loan in full.”

For example: If you’re a borrower eligible for $10,000 in relief, had a balance of $10,500 prior to March 13, 2020 and paid $1,000 toward your loans during the pause, bringing your balance to $9,500, the department will discharge your $9,500 balance, and you’ll receive a $500 refund.”

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