What Are Changes to Public Service Loan Forgiveness Program?
The several changes to the Public Service Loan Forgiveness (PSLF) program should come as a relief to the thousands of federal student loan borrowers. The changes will help eligible borrowers get forgiveness earlier than they expected. Eligible borrowers include nonprofit employees and government employees such as government workers, nurses, and teachers. These changes are only temporary. The deadline for submitting exemption applications is October 31, 2022.
What is the Public Service Loan Forgiveness Program?
The Public Service Loan Forgiveness (PSLF) program forgives the remaining debt on direct loans if the borrower meets certain criteria. If you have federal loans and are employed by a US government agency or nonprofit organization, you may qualify for forgiveness. In addition to working full time for a qualified employer, you must also make 120 qualifying monthly payments.
To qualify for a waiver, you must meet the following criteria:
Take out a direct loan or combine your other federal student loans into a direct loan.
Be employed by a US federal, state, or local government or nonprofit organization.
Work full time for this organization or agency.
Make 120 eligible payments.
Pay off your loans under an income driven payment plan.
Problems with public service loan forgiveness programs
The problem with the program is that the qualification is not as straightforward as it seems. Borrowers find that there are many hurdles they must clear in order to qualify for expected forgiveness. The program itself has very strict criteria. And the requirements are easily misunderstood. Some borrowers call lenders for clarification just to further mislead. Borrowers who do not meet all requirements are not eligible for forgiveness. There are no exceptions.
Borrowers often find themselves frustrated after their applications are rejected. Each year, thousands of forgiveness applications from borrowers hoping for forgiveness are rejected for a variety of reasons. For some, it was due to the wrong type of loan or repayment plan. For others it was because the employer was not qualified. Others worked for a qualified employer but were turned away because they only worked part-time.
Changes to the Student Loan Forgiveness Program are intended to make it easier for eligible borrowers to forgive their loans.
Most notable changes to the Public Service Loan Forgiveness Program
Some changes to the program are:
1. All student borrowers repayment installments will be charged to the PSLF account.
As part of the PSLF Limited Waiver, all payments made on loans from the Perkins Loan Program or the Federal Family Education Loan (FFEL) will now count toward qualifying for the forgiveness. One is the type of payment plans and the other is the requirement that payments be made in full and on time.
This means that if you currently have Perkins Loans, FFEL Loans, or other indirect loans, you can take advantage of this limited discount.
2. Active duty members may charge deferrals and deferrals towards the SS.
Previously, service members who withheld payments while on active duty did not receive an exemption credit. This was a huge blow to the active services. PSLF waivers address this issue for active duty members. For a limited time, postponements and forgiveness will be counted towards the PSLF.
The Department of Education goes one step further by providing automatic PSLF credit to military service members and federal employees.
3. Borrowers whose applications have been rejected may reconsider their applications.
This is huge and will be a huge relief to the borrowers. Earlier, many eligible borrowers were not tolerated due to service errors or other problems. But they had no way to request a review.
Under the new exemption, if your PSLF application is denied, you can ask for it to be reconsidered. This gives all eligible borrowers a fair chance of getting the forgiveness they deserve.
How to benefit from the PSLF exemption
It is important to remember that this PSLF waiver is temporary. To receive extended benefits, you must submit a PSLF application before October 31, 2022. The waiver will not apply to applications submitted after this date.
The application involves completing and submitting one form. Evaluators use the information to verify your employment and assess whether you qualify for a waiver.
You can find all the tools and information you need on the Department of Education website. As you scroll down, the Frequently Asked Questions section provides answers to common questions borrowers ask.