Temporary Student Loan Forgiveness Ends Soon: Are You Eligible?
(NEXSTAR) – In the fall of 2021, the Civil Service Loan Forgiveness Program was revamped by the Biden administration. Since then, thousands of borrowers have received $8.1 billion in student debt relief.
But many others who may be eligible for the program under a temporary waiver are running out of time to apply for loan forgiveness.
The Civil Service Loan Cancellation Program, or PSLF, was created in 2007 with the aim of helping employees of non-profit and government organizations by canceling their student loans after 10 years of payments (120 payments in total). The overall approval rating among applicants has been low – just 1 in 5 of the 1.3 million borrowers seeking debt relief through PSLF were on track to see relief by 2026, according to a September 2021 report from The Washington Post.
In 2021, the U.S. Department of Education announced a change that temporarily waives specific PSLF requirements to provide borrowers with credit toward loan forgiveness, regardless of their federal loan type or they had been enrolled in a specific payment plan, provided that they had consolidated their debt before the end of the waiver.
Before the to renouncer, borrowers had to have a specific federal loan – a direct loan – to be eligible for the PSLF. Borrowers could consolidate their debt into direct loans for PSLF, but any payments made on the loans prior to consolidation were not counted in the required tally.
This waiver is currently due to expire after October 31, 2022, meaning eligible borrowers only have around four months left to apply. Richard Cordray, the head of federal student aid, said at a conference earlier this week that, while pushing for the PSLF waiver to be extended, President Biden may not have the executive authority to approve such a move.
A recent report from the Student Loan Protection Center reveals more than nine million public service workers are likely to be eligible for debt cancellation through the PSLF program, but have not yet filed the documents to start the process. California, Texas, Florida and New York have the most public service workers with student loan debt, according to SBPC.
As explained above, the PSLF aims to grant eligible civil servants debt forgiveness after a certain number of payments.
Eligible borrowers to have to:
- Be employed by a U.S. federal, state, local, or tribal government or nonprofit organization (federal service includes U.S. military service)
- Work full-time for this agency or organization
- Have direct loans (or consolidate other federal student loans into one direct loan)
- Make 120 qualifying payments
Under the current PSLF exemption, eligible borrowers can receive credit for payments made on other types of loans, under any payment plan, before consolidation or after the due date. . Those who have received the Teacher Loan Forgiveness can apply for the period of service that led to their PSLF eligibility, if they can certify PSLF employment for that period.
The first step in determining your eligibility is to visit the FSA website. website and logging into your account. You will be able to search for your employer in the FSA database and add information about your employment. Once you have found your employer, you will be able to see if they are eligible for the PSLF.
Then, according to SBPC Walkthrough Guide, you will need to determine the type of federal student loan you have. Direct loans are eligible for the PSLF while other loans must be consolidated into a Direct Consolidation Loan. Until the end of October 2022, previous eligible payments you have made on a non-direct loan will count towards the 120 necessary payments that PSLF requires for forgiveness.
Once you have completed the steps above, you will need to confirm your employment. You should then be able to submit your PSLF form.
The FSA has created a help tool to guide borrowers in filling out the form.
Who is eligible for already approved student loan forgiveness?
Although widespread student loan forgiveness has yet to become a reality, some US borrowers have already received debt relief. About 1.3 million borrowers have seen $26 billion in student debt forgiveness since the president Biden to take place.
In addition to the thousands of borrowers who have benefited from debt cancellation under the revamped PSLF program, another 690,000 borrowers saw a total of $7.9 billion in student loans wiped out by discharges due to borrower defenses and school closures. More than 400,000 borrowers have received more than $8.5 billion in debt forgiveness through total and permanent disability release.
Last month the Biden administration agreed to cancel $6 billion in federal student debt for approximately 200,000 borrowers as part of a proposed class action settlement. Borrowers say their college defrauded them and their requests for relief from the Department of Education have been delayed for years.
Biden should announce plans for more widespread student debt cancellation in July or August.