Some joyous professionals share their joy on social media after discovering that a federal program has eliminated their student debt.
Dossett took advantage of a program that originally failed to deliver on its promise to offer student debt relief to thousands of public workers, including teachers, police officers, and firefighters.
The administration of President Joe Biden revised the public service loan forgiveness program in October. For years, thousands of borrowers applied for forgiveness from the program, but nearly all were turned down by the federal government.
Department data now shows that roughly 70,000 borrowers have qualified for nearly $5 billion in aid since October.
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The review was designed to allow borrowers to correct errors and count the payments they were trying to make for the program, as well as consolidate loans or enter the correct repayment plan to be eligible. It is expected to shorten the amount of time that more than 550,000 borrowers — those who have already consolidated their loans — must make payments to qualify for forgiveness, the government said.
If you have student loans and are wondering if your job qualifies, here are steps you can take to explore getting relief.
What is Public Service Loan Forgiveness? How originated?
Public Service Loan Forgiveness is a program that was launched in 2007 in an effort to direct more college graduates into public service. As long as they made 10 years of payments on their federal student loans, the program promised to erase the rest.
The show, however, proved anything but forgiving.
Before the October changes, only 16,000 borrowers had seen their debt forgiven or canceled, according to the Department of Education. About 1.3 million people are trying to pay off their debts through the program.
One of the most problematic parts of Public Service Loan Forgiveness: Many borrowers had the wrong type of loan and didn’t realize they weren’t eligible for relief.
When the loan forgiveness program was first introduced, many of the loans offered by the federal government were Federal Family Education Loans (FFEL), or loans made through private entities but insured by the federal government.
The government stopped offering those loans in 2010 and now relies on direct loans, the kind eligible for forgiveness. The Department of Education said that about 60% of borrowers with an approved employer have FFEL loans.
Who is eligible for student loan forgiveness?
Previously, the government restricted eligibility for the Student Loan Forgiveness program to only certain types of federal student loans and specific repayment plans.
However, through October 2022, borrowers who have made 10 years’ worth of payments while in a qualifying job, such as positions with federal, state, or local government, a nonprofit organization, or the U.S. military. They will now be eligible for loan relief no matter what type of federal loan or repayment plan they have.
Previous loan payments that were previously ineligible will now count, bringing some borrowers closer to forgiveness, also known as “cancellation” of their loan. That is expected to help especially borrowers with Federal Family Education Loans.
Among other changes, the department will allow servicemembers to count time on active duty toward 10 years, even if they pause their pay during that time.
How can I find out if my former or current employer qualifies for PSLF?
Use this helpful tool from the Federal Student Aid website to check if you work for a qualified employer: https://studentaid.gov/pslf/
Provides information on which employers are eligible for the Public Service Loan Forgiveness program.
How do I check what federal loans I have?
If borrowers aren’t sure what type of loan they have, they can ask their loan servicer for that information or they can check the federal government’s website for financial aid, according to Betsy Mayotte, president of the Institute of Student Loan Counselors.
If you don’t know what type of federal loans you have, you can see what loans you have by logging into your account at StudentAid.gov, going to the My Help page, and scrolling down to the Loan Breakdown section.
If I qualify, what steps do I need to take?
Changes to the loan forgiveness program will be made in two parts.
The agency will first relax some of the rules that had prevented eligible borrowers from paying off their loans, through a limited waiver. The government, for example, will allow payments on any one of a person’s loans to count toward the total number required for forgiveness.
The Public Service Loan Forgiveness waiver will be available to borrowers who have direct loans, Federal Family Education Loans, and Perkins Loans.
Parent PLUS loans are not eligible under the limited exemption.
The department said it would automatically credit borrowers who already have direct loans and have shown they work in an eligible field. Others who have not enrolled in the program or do not have eligible federal loans will need to apply for forgiveness, which may require them to consolidate their loans. Borrowers will have until October 2022 to apply.
For more information on loan consolidation, visit StudentAid.gov/Manage-Loans/Consolidation.
The Department of Education also plans to review all denied Public Service Loan Forgiveness applications and give federal employees automatic credit for forgiveness.
Other changes will come more slowly through regulations created by “rulemaking,” a long and complicated bureaucratic back-and-forth between the government and other stakeholders.
For more information, visit StudentAid.gov/PSLFWaiver.
How do you get credit for past payments under the new rules?
For a limited time, borrowers can get credit for past payments made on loans that would not otherwise qualify for the Public Service Loan Forgiveness program.
There are two requirements to receive additional qualifying payments: full-time employment and loan consolidation.
For example, you must have worked full-time for a qualifying employer when previous payments were made, according to Federal Student Aid.
Some part-time workers may qualify under certain circumstances. Let’s say you were employed in more than one qualifying part-time job at the same time. He would be considered full-time if he worked a combined average of at least 30 hours per week.
It may take several months for the borrower’s account information to reflect the new payment count, according to Federal Student Aid.
How long can I get credit for payments?
To be sure, you can only receive credit for payments made after October 1, 2007, since that’s when the Public Service Loan Forgiveness program began.
For any period in which you can receive additional qualified payments, you must apply. Temporary Expanded PSLF certification and application and Public Service Loan Forgiveness.
Who may need to consolidate their loans?
If you have loans from the Federal Family Education Loan Program, Federal Perkins Loans, or other types of federal student loans that are not direct loans, you must consolidate them into the direct loan program by October 31, 2022, according to Help. Federal for Students.
Borrowers cannot receive credit for payments if they consolidate after that date. Once the consolidation process is complete, submit a PSLF form to your loan servicer.