The federal program failed to fulfill its promise to provide student debt relief to thousands of civil servants, including teachers, police officers, and firefighters. Now the government is trying to get it right.
On Wednesday, the U.S. Department of Education announced a drastic change in the civil service loan forgiveness program after thousands of borrowers applied for forgiveness, almost all of which were rejected by the federal government.
After making a 10-year payment, many have noticed that they have the wrong type of federal loan or repayment plan to be eligible for the program. Thousands of people straddle the debt they thought would be erased.
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Due to a temporary change until October 2022, these borrowers are eligible to liquidate their loans.
The overhaul is also designed to allow the borrower to correct the error and count the payments that the borrower was trying to make to the program. The government said more than 550,000 borrowers (those who have already integrated their loans) are expected to reduce the time they have to pay to qualify for forgiveness.
The change will immediately eliminate the debt of 22,000 borrowers to reach $ 1.7 billion, the agency said. The government estimated that an additional 27,000 borrowers could be exempt from debt of about $ 2.8 billion if they proved they were employed in qualified jobs.
If you have these loans, here are the steps you can take to get relief:
What is a public service loan forgiveness? How did it start?
Public Service Loan Forgiveness is a program launched in 2007 to guide more college graduates to public services. As long as they paid for a federal student loan for 10 years, the program promised to erase the rest.
However, this program proved to be unforgiving. According to the Ministry of Education, prior to Wednesday’s announcement, only 16,000 borrowers saw their debt allowed through the program. About 1.3 million people are trying to repay their debt through this program.
One of the most problematic parts of public service loan forgiveness: Many borrowers had the wrong type of loan and were unaware that they were not eligible for relief.
When the loan exemption program was first introduced, many of the loans provided by the federal government were family federal education loans (FFEL), 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 Ministry of Education said that about 60% of borrowers with approved employers hold 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 qualified jobFederal, state, local, non-profit, and US military positions are eligible for loan relief, no matter what type of federal loan or repayment plan they have.
Previously ineligible past loan payments are counted and some borrowers approach forgiveness. This is expected to be especially useful 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 can I tell if my past or current employer is eligible for PSLF?
To see if you are working for a qualified employer, use this help tool on the Federal Student Aid website: https: //studentaid.gov/pslf/
It provides information on which employers meet the requirements of the Public Service Loan Licensing Program.
How can I find out which federal loan I have?
According to Betsy Mayotte, chairman of the Student Loan Advisors Association, if a borrower does not know what type of loan they have, they can ask the loan servicer for that information or check the federal website for financial assistance. I can do it.
If you don’t know what kind of federal loan you have, log in to your account at StudentAid.gov and[マイエイド]Go to page[ローンの内訳]You can see which loan you have by scrolling to the section.
What steps do I need to take if I qualify?
Changes to the loan forgiveness program are made in two parts.
The agency first relaxes some of the rules that prevented qualified borrowers from paying back loans with limited exemptions. For example, the government allows personal loan payments to be counted in the total number required for forgiveness.
The public service loan exemption will be available to borrowers with direct loans, federal family education loans and perkins loans.
Parent PLUS loans are not eligible for limited exemption.
The ministry said it would automatically lend to borrowers who have already received direct financing and have proved that they are working in a qualified area. 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. The borrower must apply by October 2022.
For more information on loan consolidation, please visit StudentAid.gov / Manage-Loans / Consolidation.
The Ministry of Education also plans to consider all denied public service loan forgiveness applications and give federal officials automatic credit for forgiveness.
Other changes occur more slowly due to the regulations made by “rule-making,” a long and complex bureaucratic exchange between the government and other stakeholders.
For more information, please visit StudentAid.gov / PSLFWaiver.
How do 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 Civil Service Loan Exemption Program.
There are two requirements to receive additional eligible 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 qualify under certain circumstances. Let’s say you are employed by multiple qualified part-time workers at the same time. If you work on a total average of at least 30 hours a week, you are considered full-time.
According to federal student assistance, it may take several months for the borrower’s account information to reflect the new number of payments.
How far back can I get credit for payments?
Indeed, you can only receive credit for payments made after October 1, 2007. This is because the public service loan exemption program started on October 1, 2007.
You must apply for the period during which you may receive additional eligible payments.
Who needs to consolidate loans?
If you have a federal family education loan program loan, a federal perkins loan, or any other type of federal student loan that is not a direct loan, integrate them into the direct loan program by October 31, 2022, according to federal student assistance. is needed.
This is important for borrowers as they will not be able to receive credit for payments if they integrate after that date. Once the integration process is complete, you need to submit the PSLF form to the loan servicer.
The Help Tools on the Federal Student Assistance website will be updated in the coming months to process applications for Federal Family Education Loan Program Borrowers and Perkins Loan Borrowers.
For now, you can check their employment in step 1 of the help tool and even request a loan consolidation, Federal Student Assistance said on its website. However, these borrowers may not be able to apply for a public loan forgiveness program using the tool in the short term.
Qualification and application method
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