Federal employees could receive thousands of dollars in refunds for student loans payments that they never made under the White House’s new student loan forgiveness program.
Jason Delisle, a senior fellow at the Urban Institute who previously worked for the U.S. Senate Committee on the Budget, said in a series of tweets that some federal employees could see a significant “bonus windfall” as a result of a technicality in President Joe Biden’s new student loan forgiveness program. If an employee had previously taken advantage of a federal relief program, where the agency they worked for paid up to $10,000 per year of student loan debt, refunds offered by the Department of Education (DOE) on payments made during the pandemic would go directly to the employee, as opposed to the agency that actually made the payment, Delisle alleges.
The DOE’s website discussing qualification and conditions on the new student loan program states that any voluntary payments made during the pandemic on a loan that would have otherwise been forgiven will “automatically” be refunded, “even if someone else made a payment on your loan.” To qualify, borrowers must have an outstanding balance on their student loan payment.
The DOE website gives an example where a borrower, eligible for $10,000 in relief, paid $1,000 on a $10,500 balance during the pandemic. This borrower would see the remaining $9,500 discharged and receive a $500 refund.
Delisle directly references an Office of Personnel Management (OPM) report on the Federal Student Loan Repayment Program, and notes that per the program, federal employees had up to $10,000 per year in student loans repaid for them by the federal government agency that employed them. In 2018, 10,412 federal employees received a combined $78.7 million in federal relief, according to the OPM.
If this ends up being the case, the federal employee, who would have qualified for loan payment from the agency if he had a federal loan, now receives that old loan payment made on his behalf as a cash bonus for having HAD a federal loan he no longer has.
— Jason Delisle (@delislealleges) September 14, 2022
Since these payments continued through the pandemic, they are eligible for refunds under the president’s new student loan forgiveness program, said Delisle, citing the DOE. Since it is “not feasible or practical for the loan servicer to refund payments made by a third party,” the refund will be sent directly to the employee, according to Delisle.
While it isn’t clear how many federal employees could benefit from the “windfall” Delisle describes, 33% of all borrowers owe less than $10,000 in federal student debt, according to CNBC.
The OPM, the DOE, the White House and the Urban Institute did not immediately respond to the Daily Caller News Foundation’s request for comment.
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