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In October 2021, the Biden administration announced a one-year opportunity for student borrowers seeking civil service loan forgiveness to get closer to the debt-free state.
Signed into law by then-President George W. Bush in 2007, the Public Service Loan Forgiveness Program allows certain nonprofit and government employees to have their federal student loans forgiven after 10 years or 120 payments. . However, the program has been plagued with problems, resulting in few who actually benefit from the aid.
Thanks to the policy solution known as the PSLF Limited Waiver, nearly 360,000 borrowers are now eligible for $24 billion in loan forgiveness, according to US Department of Education data analyzed by expert of higher education Mark Kantrowitz.
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The average borrower has over $67,000 in student debt.
“These borrowers previously faced hurdles based on frustrating technicalities despite being in skilled government jobs,” Kantrowitz said.
Reforms under the Biden administration included reassessing borrower terms and counting certain payments that were previously ineligible due to a borrower’s type of loan or repayment plan.
Although the opportunity ended in October, borrowers still have options if they don’t benefit from the one-year solution.
Some borrowers may get an adjustment to the number of payments
The Department of Education said some public sector borrowers will be eligible for a one-time adjustment to their number of payments, even if they missed the limited PSLF waiver. The adjustment will take place next July.
This could cause borrowers to get credit for certain payments that were previously disqualified for their required 120 payments, including partial and late payments, and those not considered due to loan type or payment plan. repayment of a borrower.
Months in which a borrower was listed on a payment deferral or forbearance can also count toward their timeline.
However, to qualify for one-time relief, you must have direct loans. If you have a Federal Family Education Loan (FFEL) or a Federal Perkins Loan, you must consolidate these into Direct Loans with your agent by May 1, 2023.
There are also permanent changes coming to the Civil Service Loan Forgiveness Program, starting next July 1, which also allow borrowers to get credit for late payments or months in certain types of reports.
How to know if you are eligible for the PSLF
There are generally three main requirements for the cancellation of utility loans, although recent changes provide additional flexibility in some cases:
- Your employer must be a government organization at any level, a 501(c)(3) nonprofit organization, or another type of nonprofit organization that provides a public service.
- Your loans must be direct federal loans
- To get the rebate, you must have made 120 eligible, on-time payments under an income-based repayment plan or the standard repayment plan. (There are approximately 14 plan options for repaying your student loans, but to qualify for Public Service Loan Forgiveness, you must be enrolled in one of these four income-based repayment plans: Repayment in income-tested, income-based reimbursement, pay-as-you-earn or revised pay-as-you-go reimbursement.
The best way to find out if your job qualifies for public service is to complete the so-called employer certification form.
Many people think they have to fill out this form; in reality, it’s optional, Kantrowitz said. (In theory, you could wait until you’ve made all 120 payments and then apply, “but it may be easier if you complete the employer certification forms from the start, especially if one of your previous employers doesn’t doesn’t exist anymore,” he said.)
Try to complete this form at least once a year, he added, and keep records of your confirmed eligible payments.
Borrowers pursuing PSLF should also be aware that their servicer recently switched from FedLoan to MOHELA.
Additionally, all months during the pandemic-era payment pause that has been in effect since March 2020 count towards your 120 necessary payments, whether or not you have made any payments on your loans.
Student loan bills are expected to resume about 60 days after the dispute involving the Biden administration’s sweeping student loan forgiveness plan is resolved. If the lawsuits are still ongoing at the end of June, payments will resume 60 days later, at the end of August.
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