The federal program broke its promise to ease student debt to thousands of public servants, including teachers, police and firefighters. Now the government is trying to get it right.
On Wednesday, the US Department of Education announced a drastic change in the civil service loan exemption program after thousands of borrowers applied for an exemption, nearly all of which were rejected by the federal government.
After making a 10-year payment, many noticed that they had the wrong type of federal loan or repayment plan to qualify for the program. Thousands of people are riding on debt that they thought was written off.
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Due to a temporary change until October 2022, these borrowers are eligible to liquidate their loans.
The redesign is also designed to allow the borrower to correct the error and count the payments the borrower was attempting to make to the program. The government has said that more than 550,000 borrowers (those who have already integrated their loans) should reduce the time they have to pay for a discount.
The change will immediately eliminate the debt of 22,000 borrowers to reach $ 1.7 billion, the agency said. The government has estimated that an additional 27,000 borrowers could be relieved of about $ 2.8 billion in debt if they can prove they have qualified jobs.
If you have these loans, here are the steps you can take to get relief:
What is a utility loan discount? How did it start?
Public Service Loan Forgiveness is a program launched in 2007 to guide more college graduates into public service. As long as they paid off a federal student loan for 10 years, the program promised to erase the rest.
However, this program has proven to be ruthless. According to the Ministry of Education, before Wednesday’s announcement, only 16,000 borrowers had their debt authorized under the program. About 1.3 million people are trying to repay their debt through this program.
One of the most problematic aspects of canceling civil service loans: Many borrowers did not have the right type of loan and did not know they were not entitled to relief.
When the loan exemption program was first introduced, many of the loans made by the federal government were Federal Family Education Loans (FFELs) or loans made through private organizations but insured. by the federal government.
The government stopped offering these loans in 2010 and now relies on the types of direct loans it allows. The Education Ministry said about 60% of borrowers with approved employers have FFEL loans.
Who is eligible for student loan allowances?
The government previously limited the eligibility of public service loan exemption programs to certain types of federal student loans and certain repayment plans.
However, until October 2022, the borrower who paid for 10 years during a skilled jobFederal, state, local, nonprofit, and U.S. military positions are eligible for loan relief regardless of what type of federal loan or repayment plan they have.
Previous ineligible loan repayments are accrued and some borrowers are approaching forgiveness. This should be especially helpful for federal family mortgage borrowers.
Among other changes, the department will allow members of the armed forces to count active hours for 10 years, even if payments are suspended during that period.
How do I know if my past or current employer is eligible for the PSLF?
To see if you work for a qualified employer, use this help tool on the Federal Student Aid website: https://studentaid.gov/pslf/
It provides information on employers who meet the requirements of the Public Service Loan Licensing Program.
How do I know which federal loan I have?
According to Betsy Mayotte, president of the Student Loan Advisors Association, if a borrower does not know what type of loan they have, they can request that information from the loan manager or go to the federal website for financial assistance. I can do it.
If you are unsure what type of federal loan you have, log into your account on StudentAid.gov and[マイエイド]Go to page[ローンの内訳]You can see what loan you have by scrolling down to the section.
What steps must I take if I am eligible?
The changes to the loan exemption program are in two parts.
The agency first relaxed some of the rules that prevented qualified borrowers from repaying loans with limited exemptions. For example, the government allows personal loan payments to count towards the total number required for forgiveness.
The utility loan exemption will be available to borrowers with direct loans, federal family education loans, and Perkins loans.
Parent PLUS loans are not eligible for the limited exemption.
The ministry said it would automatically lend to borrowers who have already received direct funding and have proven to work in a qualified field. Others who are not enrolled in the program or have ineligible federal loans will need to apply for a forgiveness, which may require them to consolidate their loans. The borrower must apply before October 2022.
For more information on loan consolidation, please visit StudentAid.gov / Manage-Loans / Consolidation.
The Education Department also plans to review all denied public service loan cancellation requests and give federal officials automatic credit for the cancellation.
Other changes occur more slowly because of regulations made by “rule making,” a long and complex bureaucratic exchange between government and other stakeholders.
For more information, please visit StudentAid.gov / PSLFWaiver.
How can I receive credit for past payments under the new rules?
For a limited time, borrowers will be able to receive credit for past payments made on loans that are not covered by the Public Service Loan Exemption Program.
There are two conditions for receiving additional qualifying payments: full-time employment and loan consolidation.
For example, according to Federal Student Aid, he must have worked full time for a qualified employer when the advance payment was made.
Some part-time workers may be eligible under certain circumstances. Let’s say you are employed by several skilled part-time workers at the same time. If you work an average of at least 30 hours per week, you are considered full-time.
According to Federal Student Aid, it may take several months for the borrower’s account information to reflect the new number of payments.
How far can I get credit for payments?
In fact, you can only benefit from a credit for payments made after October 1, 2007. In fact, the civil service loan exemption program began on October 1, 2007.
You must apply for the period in which you could receive additional eligible payments.
Who Needs to Consolidate Loans?
If you have a Federal Family Education Loans Program loan, Federal Perkins Loan, or any other type of Federal Student Loan that is not a Direct Loan, make them part of the Direct Loan Program by the 31st. October 2022, according to federal student aid. is necessary.
This is important for borrowers as they will not be able to receive credit for payments if they integrate after this date. Once the onboarding process is complete, you need to submit the PSLF form to the loan manager.
Help tools on the Federal Student Aid website will be updated in the coming months to process applications from Federal Family Education Loans program borrowers and Perkins loan borrowers.
For now, you can check their employment in Step 1 of the Help Tool and even apply for a loan consolidation, Federal Student Assistance said on its website. However, these borrowers may not be able to apply for a public loan cancellation program using the short term tool.