Public service loan forgiveness guidelines: what you need to know
More than 550,000 people could have their debt written off sooner than expected due to changes to the PSLF, the education ministry said. This includes 22,000 borrowers who are immediately eligible for debt relief.
This is what student loan borrowers need to know who is eligible and what steps they may need to take to qualify for debt relief.
The program was created in 2007 and encourages workers to keep lower paying public service jobs despite their student loan debt. Teachers, social workers and first responders may be eligible, as well as doctors and lawyers – if they were employed full-time by a non-profit organization or the government while making payments.
After borrowers make 120 monthly payments, their remaining federal student debt is written off.
But before the recently announced changes, eligibility also depended on having a direct loan and being enrolled in an income-based repayment plan, which sets payments based on income and family size. . Those who received federal family education loans, made by private lenders but backed by the government, were ineligible. Over 80% of borrowers who filed forms that did not meet program requirements received one of these loans.
Borrowers say these qualifications were not always clearly communicated by the company that manages their loans, and many found they were not eligible for debt relief only after making almost 120 payments. .
Borrowers are allowed to consolidate a federal family education loan into a direct loan to become eligible for the program, but none of their previous payments would count towards the required 120 – so far.
Here’s who got the eligibility
Federal student type no longer matters due to temporary waiver a borrower’s loan or the payment plan to which he is registered. All payments will be eligible for the public service loan forgiveness program if the borrower was working full time for an eligible employer.
The Department of Education will review past payments to count those made on federal family education loans. It will also count the months that service members spent on active service with the PSLF, even if loan repayment was temporarily suspended through deferral or forbearance.
The department’s review will also look at payments that have been potentially mis-counted by the business or organization that manages the loan. In some cases, borrowers missed their payments because their payments were delayed by a penny or a few days. Sometimes a payment was recorded, but the record showed that no invoice had been generated. The education ministry said it would also adjust the number of borrowers affected by the problem.
What to do now and how long will it take
Some borrowers will have nothing to do and the ministry will automatically review their payments. This applies to anyone who has ever consolidated their loans into a direct loan and had at least one qualified certified job.
These borrowers should seek an email from Federal Student Aid in the coming weeks regarding the number of additional payments that may be eligible.
The ministry warns there could be delays in processing what it expects to be an influx of PSLF nominations. He says he expects account adjustments to be made in the “coming months.”
How the account is different this time
Borrowers who have experienced errors on the part of their loan manager – the company that handles billing and other services – or received incorrect information about the remittance of civil service loans in the past may be skeptical about to changes.
But under the new waiver, the review of PSLF payments will be carried out by the education ministry itself based on a separate database from loan officers that shows when a payment has been made. carried out.
VSa does a borrower receive a refund?
Yes it’s possible. Borrowers who have made more than 120 qualifying payments may receive reimbursement for the additional payments if they were made after their loan was consolidated.
For example, a borrower who made 60 payments on a federal family education loan, then consolidated and made 70 payments on a direct loan could be repaid for those 10 additional payments in addition to having their unpaid debt canceled immediately.
These people remain ineligible
Parents who have borrowed what is called a PLUS loan from the federal government do not receive any benefit from the Public Service Loan Forgiveness Waiver. PLUS loans are the only federally guaranteed loans available to parents, and they generally have higher interest rates than student loans.
Parents with a PLUS loan who work in an eligible government or nonprofit position can still consolidate that loan into a direct loan to become PSLF eligible – as they could before the new guidelines were put in place. But payments made before the consolidation will not count towards the 120 needed for forgiveness.
Payments that borrowers may have made while a direct loan was in default will continue to not count towards the remission, and borrowers who have already paid off their loans will not receive a refund if more than 120 payments have been made. carried out.