- Some student-loan borrowers have been placed on administrative forbearance as servicers work to resolve errors.
- Servicer Aidvantage said borrowers have 90 days to request a refund on payments made during forbearance.
- The Education Department recently instructed all servicers to offer refunds to impacted borrowers.
Some student-loan borrowers have 90 days to get a refund on payments made since October.
The federal student-loan payment pause ended in September once interest started accruing again on borrowers’ balances, with bills starting to become due one month later. However, due to the unprecedented nature of the resumption, borrowers faced a host of challenges with their servicers, including late and inaccurate billing statements and hours-long hold times with customer service.
Due to the challenges borrowers were experiencing, President Joe Biden’s Education Department identified a range of mistakes it found in borrowers’ accounts — and it instructed all servicers to place impacted borrowers on administrative forbearance. If implemented correctly, that means those borrowers would not owe any payments, and interest would not accrue, until their account errors were resolved.
However, some borrowers still made payments before they found their account on forbearance. A new notice posted on servicer Aidvantage’s website states that borrowers who want a refund on those payments have three months to take action:
“If you were recently notified that your student loan account was placed into an administrative forbearance for the months of October through December 2023, and you would like to have any payment(s) you made during these months refunded to you, you have 90 calendar days from the date shown on your notification to contact us to request a refund.”
While the other federal servicers do not appear to state that timeframe on their website, a Federal Student Aid internal memo said that it has instructed all servicers to “offer to refund any impacted or recent payments made by these borrowers.” So borrowers who made payments while on administrative forbearance, but want a refund, can likely contact their servicer to address the issue.
As Business Insider previously reported, many borrowers have reported confusion with the forbearance status on their accounts because some of them were not notified of the change until they logged in. For example, a notice on a borrower’s account serviced by MOHELA said: “We are in the process of updating your account. You will not be due for payment until after December 28, 2023, and your interest rate will be 0% through December 28, 2023.”
But it did not include any other information as to why the account’s status had changed. The lack of clarity even prompted lawmakers like Massachusetts Sen. Elizabeth Warren to send a letter to MOHELA’s CEO last month requesting information on how the servicer is conducting borrower outreach.
“The notices MOHELA provided to borrowers regarding their errors fail to explain how or why borrowers were placed in administrative forbearance, including omitting any mention of MOHELA’s error being the cause,” the letter said.
