Public service loan forgiveness: nearly 30,000 debt cancellations granted to date under new rules


“I cried when I got the letter. Honestly, I feel like I can finally breathe again,” said Rickfelder, who still had five years of payments to make under the old loan forgiveness program rules. of the public service. She started paying off her student loan debt about 16 years ago.

The letter, which she received from the US Department of Education in October, said she would get credit for 91 additional monthly payments she made for her student. ready. This meant that she had already made more than the 120 payments required for debt cancellation under the PSLF program, which caters to borrowers working in the public and not-for-profit sectors.

“I love to teach. But it’s always been a financial struggle. Now I don’t have to find a workaround for the debt anymore,” said Rickfelder, a single mom.

Over the years, the money she borrowed for her undergraduate and master’s degrees exploded because her payments barely covered the student’s interest. ready. His debt has grown to over $ 189,000.

Now, in addition to forgetting her remaining student loan debt, she also received a refund last week for the extra payments she made.

Eligibility for the PSLF program is temporarily extended until October 31, 2022, so it now includes borrowers who have older loans that were not originally eligible as well as those who were on the wrong repayment plan but met the other requirements.

More than 550,000 people are expected to have their debt written off sooner than expected as a result of the changes.

Problems with the student loan exemption program

The Public Service Loan Forgiveness program was enacted by President George W. Bush in 2007 and encourages workers to keep lower paying public service jobs despite their student 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.

Once borrowers have made 10 years of qualifying monthly payments, their remaining federal student debt is written off.

But the program has long been criticized for being difficult to navigate, with borrowers receiving little help from their loan officers, companies that handle billing. Many borrowers said they found out they weren’t eligible for the rebate until they had made what they believed to be the equivalent of a decade of qualifying payments.

Prior to 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 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.

Many student loan borrowers are still waiting

Due to the temporary waiver, it no longer matters what type of federal student loan a borrower has or what payment plan they are enrolled in. All payments will be eligible for PSLF if the borrower was working full time for an eligible employer.

But many borrowers who are newly eligible for debt relief are still waiting to see their balances reduced. It will take time for the Department of Education to review all of their accounts.

“Please understand that complex changes of this magnitude are difficult to process and execute,” wrote Richard Cordray, director of operations for Federal Student Aid, in a letter sent to borrowers earlier this month.

“We are working as quickly as possible to update your account and give you clear and precise information. It may take several months,” he added.

The letter also acknowledged that some eligible borrowers had received confusing information from their loan officers and some had even been turned down since the program redesign was announced. Cordray promised that the accounts of these borrowers would be reviewed in the coming months.

What student loan borrowers can then do

Many borrowers will not have to do anything for the Department of Education to review and update the number of their eligible payments.

But those with older federal family education loans will need to consolidate into a direct loan if they haven’t already. Those who already have direct loans but have not submitted an Employment Certification form for previous repayment periods should also do so now.

Borrowers have until October 31, 2022 to make these changes to qualify for a waiver under the Temporary Waiver. For those who are unsure if they are eligible, the Department of Education has updated its PSLF Help Tool earlier this week to reflect the new guidelines. The tool offers more details on the next steps necessary to take advantage of the waiver.


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