Who Can Qualify For Student Loan Forgiveness – A major change to the loan forgiveness program that will erase the debts of thousands and thousands of people has been announced by the Ministry of Education.
A federal program has failed to deliver on its promise to offer student debt relief to thousands of public employees, including teachers, police officers and firefighters. Now the government is trying to fix it.
Who Can Qualify For Student Loan Forgiveness
The U.S. Department of Education announced sweeping changes to its public service loan forgiveness program Wednesday after thousands of borrowers applied for forgiveness and nearly all were turned down by the federal government.
Student Loan Forgiveness Forms
After a decade of repayments, many learned they had the wrong type of federal loan or repayment plan to qualify for the program. Thousands of people have found themselves in debt that they thought would be eliminated.
The overhaul is also meant to allow borrowers to correct mistakes and catch up on the payments they were trying to make under the program. It is expected to shorten the amount of time more than 550,000 borrowers — those who have already consolidated their loans — must make payments to qualify for forgiveness, the government said.
The changes will immediately wipe out $1.7 billion in debt for 22,000 borrowers, the agency said. The government has estimated that another 27,000 borrowers could get about $2.8 billion worth of debt forgiveness if they can prove they were working for an eligible job.
Public Service Loan Forgiveness is a program started in 2007 to attract more college graduates to public service. As long as they paid off their federal student loans over 10 years, the program promised to write off the balance.
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The program, however, proved far from unforgiving. Before Wednesday’s announcement, only 16,000 borrowers had been forgiven through the program, according to the Department of Education. About 1.3 million people are trying to pay off debt through the program.
One of the most problematic parts of public service loan forgiveness is that 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 implemented, many of the loans offered by the federal government were Family Federal Education Loans (FFELs) or loans made through private entities but insured by the federal government.
In 2010, the government stopped making these loans and now relies on instant forgivable loans. The Department of Education reported that about 60% of employer-approved borrowers have FFEL loans.
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Previously, the government limited eligibility for the Public Service Loan Forgiveness program to only certain types of federal student loans and certain repayment plans.
However, by October 2022, borrowers who have made 10 years of payments while in an eligible position — such as positions in federal, state or local government, nonprofit organizations, or the U.S. military — will now be eligible for loan relief regardless of the type of federal loan or repayment plan they have.
Previous loan payments that were previously ineligible will now be taken into account, bringing some borrowers closer to forgiveness. This is expected to especially help those borrowers who receive federal family education loans.
Among other changes, the department will allow service members to credit up to 10 years of active duty, even if they suspend benefits during that time.
Am I Eligible For Public Service Loan Forgiveness?
Use this referral tool on the Federal Student Aid website to see if you work for an eligible employer: https://studentaid.gov/pslf/
If borrowers aren’t sure about the type of loan, they can ask their loan officer for that information or check the federal government’s financial aid website, according to Betsy Mayott, president of the Student Loan Counselor Institute.
If you don’t know what federal loans you have, you can see what your loans are by logging into your StudentAid.gov account, going to the My Help page, and scrolling down to the Loan Analysis section.
The agency will first relax some of the rules that have prevented eligible borrowers from repaying their loans through a limited waiver. The government, for example, will allow payments on any individual loan to count toward the total amount required for forgiveness.
Getting Answers: How Do I Know If I Qualify For Student Loan Forgiveness?
Public service loan forgiveness waivers will be available to borrowers with Direct Loans, Federal Family Education Loans and Perkins Loans.
The department said it will automatically lend to borrowers who already have Direct Loans and have proven they work in an eligible field. Others who are not enrolled in the program or have ineligible federal loans will need to apply for forgiveness, which may require them to consolidate their loans. Borrowers will be able to apply until October 2022.
The Department of Education also plans to review all denied Civil Service Loan Forgiveness applications and provide federal employees with an automatic loan forgiveness loan.
Other changes will happen more slowly because of the regulation created by “rule-making,” a long and complex bureaucratic process between government and other stakeholders.
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For a limited time, borrowers can receive late payment credit on loans that would otherwise not qualify for the Public Service Loan Forgiveness Program.
For example, you must be working full-time for an eligible employer when you received previous Federal Student Aid payments.
Some part-time employees may qualify under certain circumstances. Let’s say you worked more than one skilled part-time job at the same time. You will be considered full-time if you worked an average of at least 30 hours per week.
According to Federal Student Aid, it can take several months for a borrower’s account information to reflect the new payment amount.
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However, you can only get a loan for payments made after October 1, 2007, because that’s when the Public Service Loan Forgiveness program started.
If you have federal Family Education Program loans, federal Perkins loans, or other types of federal student loans that aren’t Direct Loans, you must consolidate them into a Direct Loan Program by October 31, 2022, according to Federal Student Aid .
This is important for borrowers because you cannot get a payday loan if you consolidate after this date. Once the consolidation process is complete, you must submit the PSLF form to your loan officer.
The help tool on the Federal Student Aid website will be updated in the coming months to process applications for Federal Family Education Loan Program borrowers and those with Perkins loans.
Can You Rely On Public Service Loan Forgiveness?
Right now, their employment can still be verified in Step 1 of the reporting tool and a loan consolidation can still be submitted, according to Federal Student Aid on its website. However, applying for Public Service Loan Forgiveness through this tool may not be available to these borrowers in the near future. Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you are on a federal government website.
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Do you have federal student loans? Have you worked in public service (in a government agency, military or non-profit organization)? If so, find out if you qualify for limited Public Service Loan Forgiveness (PSLF) that expires on October 31, 2022. Thousands of federal student loan borrowers have taken advantage of the waiver to get closer to full loan forgiveness.
For a limited time, a waiver gives you credit for repayment periods that weren’t previously counted—when you didn’t make a payment, didn’t make it on time, didn’t pay the full amount owed, or didn’t count toward a qualifying repayment plan.
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With the average borrower receiving a year’s worth of credit with the exemption, it’s time to find out if the PSLF exemption might be right for you. Until October 31, 2022:
Always contact Federal Student Aid or your loan servicer with questions about loan repayment. And if a company says they can help you sign up for PSLF or any down payment student loan forgiveness program, that’s a scam! Report it to the FTC at ReportFraud.ftc.gov.
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How To Know If You Would Be Included In Student Loan Forgiveness
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