eligibility and how to apply

A federal program broke its promise to provide student debt relief to thousands of public servants, including teachers, police and firefighters. Now the government is trying to do it right.

On Wednesday, the U.S. Department of Education announced sweeping changes to its civil service loan forgiveness program after thousands of borrowers requested forgiveness, almost all of which were rejected by the government. federal government.

After making a decade of payments, many discovered they didn’t have the right kind of federal loan or repayment plan to qualify for the program. Thousands of people are riding on debts they thought were written off.

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Under temporary changes until October 2022, these borrowers will be able to get their loans cleared.

The overhaul is also designed to allow borrowers to correct errors and account for payments they were trying to make for the program. This should shorten the time frame during which more than 550,000 borrowers – those who have already consolidated their loans – are required to make payments to qualify for a discount, the government said.

The changes will immediately write off 22,000 borrowers to the tune of $ 1.7 billion, the agency said. The government has estimated that another 27,000 borrowers could see about $ 2.8 billion in debt canceled if they prove they have qualifying employment.

If you have these loans, here are the steps you can take to get relief:

What is the forgiveness of civil service loans? How was he born?

The Public Service Loan Forgiveness is a program that was launched in 2007 with the aim of orienting more college graduates into the public service. As long as they made 10 years of payments on their federal student loans, the program promised to erase the rest.

The program, however, turned out to be anything but forgiving. Before Wednesday’s announcement, only 16,000 borrowers had seen their debt canceled through the program, according to the Education Ministry. About 1.3 million people are trying to get rid of their debts through the program.

One of the most problematic elements of civil service loan cancellation: many borrowers did not have the right type of loan and did not realize that they were not entitled to relief.

When the loan forgiveness program was first introduced, many of the loans offered by the federal government were Federal Family Education Loans (FFELs), or loans made through private entities but insured by the federal government.

The government stopped offering these loans in 2010 and now relies on direct loans – the type eligible for forgiveness. The Education Department said about 60% of borrowers with an approved employer hold FFEL loans.

Who is eligible for the student loan forgiveness?

The government previously limited eligibility for the public service loan forgiveness program to certain types of federal student loans and specific repayment plans.

However, until October 2022, borrowers who made 10 years of payments while in qualifying employment– such as positions in federal, state, or local government, a nonprofit organization, or the United States military – will now be eligible for loan relief, regardless of what type of federal loan or repayment plan they have. have.

Previous loan repayments that were previously ineligible will now count, bringing some borrowers closer to forgiveness. This should especially help borrowers with federal family education loans.

Among other changes, the ministry will allow military members to count active duty time around 10 years, even if they take a break in their payments during that time.

How do I know if my past or current employer is eligible for the PSLF?

Use this help tool from the Federal Student Aid website to find out if you work for an eligible employer: https://studentaid.gov/pslf/

It provides information on employers who meet the requirements of the public service loan forgiveness program.

How can I check which federal loans I have?

If borrowers are not sure what type of loan they have, they can request this information from their loan officer or they can go to the federal government website for financial assistance, according to Betsy Mayotte, president of the Institute. of Student Loan Advisors.

If you are unsure what type of federal loans you have, you can see which loans by logging into your account at StudentAid.gov, going to the My Help page, and scrolling to the Loan Breakdown section.

If I am eligible, what steps do I have to take?

The changes to the loan exemption program will take place in two parts.

The agency will first relax some of the rules that prevented eligible borrowers from paying off their loans, via a limited waiver. The government, for example, will allow payments on any one person’s loan to count toward the total number required for forgiveness.

The public service loan forgiveness waiver will be available to borrowers who have direct loans, federal family education loans, and Perkins loans.

Parent PLUS loans are not eligible under the limited waiver.

The ministry said it would automatically credit borrowers who already have direct loans and who have proven they are working in an eligible field. Others who have not enrolled in the program or have ineligible federal loans will have to request a forgiveness, which may require them to consolidate their loans. Borrowers will have until October 2022 to apply.

To learn more about loan consolidation, visit StudentAid.gov/Manage-Loans/Consolidation.

The Department of Education also plans to review all denied public service loan forgiveness requests and provide federal employees with automatic credit for the forgiveness.

Other changes will occur more slowly through regulations made by “rule-making,” a long and complicated bureaucratic back-and-forth between government and other stakeholders.

For more information, visit StudentAid.gov/PSLFWaiver.

How do you receive credit for past payments under the new rules?

For a limited period of time, borrowers can obtain credit for past payments made on loans that would otherwise not qualify for the civil service loan forgiveness program.

There are two conditions for receiving additional qualifying payments: full-time employment and loan consolidation.

For example, you must have worked full time for an eligible employer when prior payments were made, according to Federal Student Aid.

Some part-time workers may be eligible under certain circumstances. Suppose you had more than one qualifying part-time job at the same time. You would be considered full-time if you worked an average of at least 30 hours per week.

According to Federal Student Aid, it may take several months for a borrower’s account information to reflect the new number of payments.

How far can I get credit for payments?

Of course, you can only receive credit for payments made after October 1, 2007, since that is when the civil service loan forgiveness program began.

For any period during which you may receive additional eligible payments, you must file a request.

Who may need to consolidate their loans?

If you have Federal Family Education Loans Program loans, Federal Perkins Loans, or other types of Federal Student Loans that are not direct loans, you must consolidate them into the Direct Loans Program from here. on October 31, 2022, according to Federal Student Aid.

This is important for borrowers because you cannot receive credit for payments if you consolidate after this date. Once the consolidation process is complete, you must then submit a PSLF form to your loan manager.

The help tool on the Federal Student Aid website will be updated over the next few months to process applications from Federal Family Education Loans Program borrowers and those with Perkins loans. .

Right now, employment can still be verified for them in Step 1 of the Help Tool, and loan consolidation can still be requested, Federal Student Aid said on its website. But a request for the civil service loan forgiveness program through the tool may not be available in the short term for these borrowers.

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