Written By Melanie Lockert
If you made more payments than required by the Public Service Loan Forgiveness (PSLF) Program, there’s good news — you can probably get your money back.
In this guide, learn how you can get a PSLF overpayment refund. To make sure you're minimizing your PSLF payments, you can also get a downloadable copy of our PSLF tracking spreadsheet.
Let's look at why refunds have happened and what to do if you qualify.
Why are PSLF payments being refunded?
PSLF is ideal for borrowers who work in the public sector for a qualifying employer. After providing 10 years of full-time service and 120 monthly payments, your Direct Loans are forgiven, tax-free.
The U.S. Department of Education unveiled two major reforms that affect federal student loan borrowers and expand debt relief options:
- The Limited PSLF waiver, which concluded in October 2022.
- A one-time Income-Driven Repayment (IDR) account adjustment, which expires April 30, 2024.
Borrowers who didn’t utilize the limited PSLF waiver might still receive some of the same benefits through the IDR account adjustment.
Under both the limited waiver and a one-time IDR account adjustment, borrowers are eligible to receive credit for previous payments that might not have met traditional PSLF requirements.
For example, if you were on a different repayment plan other than an IDR plan or made payments before consolidating, those non-qualifying payments could now count toward loan forgiveness. Additionally, deferment and forbearance periods that meet specific requirements might qualify as well.
In some cases, this can mean you might reach the minimum number of payments necessary for loan forgiveness in a shorter time frame. In other cases, the newly qualified payments might put you over the 120 minimum. If your situation is the latter, you might be eligible for a PSLF overpayment refund.
If you qualify, you should receive PSLF automatically and get a notification from your student loan servicer. After that, if an overpayment is identified, you can expect a refund within a couple of weeks or up to two months.
Typically, you’ll get the money back from the U.S. Department of Treasury through your original payment method. If you made electronic payments, for example, you can expect to get your money back that way. If you paid via check, you’ll get a check.
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What student loan payments are eligible for a refund?
If you’ve made more than 120 payments on your Direct Loans and qualify for PSLF, you should be eligible for a refund, according to StudentAid.gov. Refunded payments are typically based on one of the following, whichever is most recent:
- The date you reached 120 payments for PSLF.
- The date the Department of Education acquired your student loans.
- Your disbursement date, if you have a Direct Consolidation Loan.
There are some notable exceptions that can impact your ability to get a refund, even if you believe you’ve met the primary criteria. Below, are some reasons you might not receive a full refund of your overpayments.
Exceptions
- You already had your loans forgiven through PSLF. If your loans were already discharged through the PSLF program, you don’t qualify for a refund.
- Payments made before consolidation. If you had FFEL loans or federal Perkins loans, you may have used a Direct Consolidation Loan to qualify for PSLF. While payments pre-consolidation now count toward PSLF thanks to the limited waiver and IDR account adjustment, these payments don’t qualify for a PSLF overpayment refund.
- You have outstanding tax debt or unpaid child support. If you owe the federal government money for taxes or have unpaid child support, your refund might be offset.
If you paid too much before consolidating your loan, you can ask your servicer to include the pre-consolidation overpayment in your refund amount. However, it isn’t guaranteed. These refunds might be reviewed on a case-by-case basis, but it’s typically in the borrower’s favor.
How to get a PSLF overpayment refund?
If you have Direct Loans that qualify for PSLF and have made additional payments beyond the 120 count, you might be eligible for a PSLF overpayment refund. In an ideal world, your loan servicer will notify you of any forgiven amount and issue an automatic refund.
If that hasn’t happened, or you think there’s been an oversight, here’s how to proceed.
Track down necessary documentation
You might be dealing with a hold-up due to missing documentation. To qualify for PSLF, you must have certified your employment throughout the entire PSLF period. Confirm whether your servicer has all of your recertifications.
Use the PSLF Help Tool to complete any missing employment certifications and to submit your PSLF application form.
Additionally, make sure all of your contact and payment information are current. This includes your address, phone number and banking information.
Contact your loan servicer
If you have questions about a PSLF overpayment refund, contact your loan servicer. MOHELA is the current loan servicer for PSLF. MOHELA should contact you if you qualify for forgiveness and can help you check your qualifying payment record.
Typically, you need to have filled out the PSLF form to get your loans transferred to MOHELA.
If you’re unsure if MOHELA is your loan servicer, go to your StudentAid.gov account dashboard. From there, click on the “My Loan Servicers” section.
Follow up on your refund request
If you know you’ve made more than 120 payments for PSLF, it might take up to two months to get your PSLF overpayment refund, depending on your situation and current processing speeds. Follow up with your loan servicer if you haven’t received your refund after two months.
Should I use forbearance while waiting for forgiveness?
If you’re hoping to get forgiveness through PSLF, the IDR account adjustment will be applied in fall 2023, according to the Department of Education. For certain loan borrowers, IDR adjustments might continue through 2024.
As student loan debt payments resume, you might consider going into forbearance to avoid making payments while waiting for potential payment credit and cancellation. But remember, any overpayments may result in a refund, so consider making payments and avoiding forbearance, if possible.
FAQs: PSLF overpayment refund
The Department of Education is reviewing accounts for borrowers who have at least one Direct Loan or one FFEL Program loan held by the agency. Through the IDR account adjustment, qualified borrowers working toward PSLF might have additional payments counted and receive loan forgiveness. If the total payments exceed 120, you might be eligible for a PSLF overpayment refund.
If you’ve already been granted student loan forgiveness or repaid your loans, you don’t qualify for a PSLF overpayment refund.
If your payment count is adjusted through the PSLF waiver or IDR account adjustment, you might’ve made more than the necessary 120 payments for PSLF. Any payments above that count might result in a PSLF overpayment refund.
If you receive a PSLF overpayment refund because you exceeded the 120-payment PSLF count, your refund isn’t considered taxable income. However, if you have another past-due tax obligation, the amount might be offset.
Not sure what to do with your student loans?
Take our 11 question quiz to get a personalized recommendation for 2024 on whether you should pursue PSLF, Biden’s New IDR plan, or refinancing (including the one lender we think could give you the best rate).
