In some cases, previous payments can be refunded after your borrower defense application is approved. A refund largely depends on why your loan is eligible, what kind of financial harm you claim, and when you submitted your borrower defense application.
For federal loans disbursed before July 1, 2017, applicable state laws generally allow borrowers to seek reimbursement for previous payments. However, the Education Department’s borrower defense rules sometimes allow for state law limitations on reimbursement.
For federal loans disbursed after July 1, 2017, but before July 1, 2020, you must ask for a reimbursement of previous payments within six years of disbursement if the borrower defense is based on “breach of contract” or “substantial misrepresentation.”
But there’s no time limit for a refund If your claim is based on a “judgment against school,” — that is to say, your claim is based on a judgment you got against the school for misleading you.
For federal loans disbursed after July 1, 2020, the Secretary of Education will determine if the loan forgiveness amount is more than the remaining debt. If your forgiveness amount exceeds your remaining loan balance, you may be eligible to receive a refund of what you’ve already paid.
Despite the fact that this program has existed for 50 years, it’s only been recently begun to be used. Unfortunately, how it works is based on policy decisions, not just on a simple set of rules — and policy can change (and has changed) from one presidential administration to the next.