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by: Anna Helhoski, NerdWallet via Nexstar Media Wire
(NerdWallet) – A limited waiver announced by the U.S. Department of Education is expected to immediately wipe the slate clean for 22,000 student borrowers seeking Public Service Loan Forgiveness and speed the process for at least 500,000 more.
It’s not the broad student loan forgiveness borrowers may be dreaming of. Instead, it’s the latest example of the Biden administration’s strategy of tackling student loan debt through existing programs.
“The Biden administration has committed to an overhaul of the student loans system and how it functions — whether the programs are easy to access and whether people can get forgiveness — and I think this is an important step forward on that path,” says Sarah Sattelmeyer, project director of education, opportunity and mobility in the higher education initiative at New America, a public policy think tank.
Neither President Joe Biden nor Congress has committed to forgiving loans en masse despite calls to do so from prominent Democrats, state officials and consumer rights advocacy groups.
But since the start of Biden’s term, the Department of Education estimates that more than $11.5 billion in loans have been canceled for over 580,000 borrowers through updates to existing forgiveness programs.
The department is clearing backlogs of applications from borrowers who were defrauded by their schools, faced school closures before attaining a degree and have permanent disabilities — now, that list also includes those seeking forgiveness in exchange for public service.
Here are the improvements that have been made so far.
The Department of Education issued new guidance in October to ease the burdensome application process for Public Service Loan Forgiveness, or PSLF. It’s a program to discharge debt for borrowers who work for public service employers, like the government or public schools and hospitals.
Forgiveness through PSLF has been notoriously difficult to attain because of complex rules about the type of loans and repayment plans allowed. Plenty of technicalities have disqualified payments from counting toward the 120 needed for discharge. And then there’s the paperwork: 10 years’ worth of employment certification.
As a result of the red tape, only about 1% of the nearly 400,000 borrowers who have applied have ever had loans forgiven through PSLF, according to federal student aid data.
When the PSLF program was created, total student debt was around $550 billion, says Seth Frotman, executive director of the Student Borrower Protection Center. “We were worried about the impact student debt was having on the viability of those entering and staying in public service fields,” Frotman says. “It’s even more important that this program works in light of where we find ourselves today — facing a $1.7 trillion student debt crisis.”
The department has pursued quick fixes before, like combining employment eligibility forms with the application and temporarily expanding eligibility for select borrowers. But the Department of Education acknowledged in a June 2021 memo that those efforts haven’t been enough to curb “confusion and frustration.”
“There are a lot of people who were paying on their federal loans, working in a qualifying job, believing they were working toward forgiveness only to find out, when they eventually submitted an application, that they had the wrong type of loan, like a FFEL loan, or they were not in the right type of repayment plan,” says Bradley Custer, senior policy analyst for higher education at the Center for American Progress, a public policy think tank.
Under the new PSLF limited waiver, borrowers who worked full time for a qualifying public service employer can get prior loan payments counted toward PSLF, even if payments were:
Parent PLUS borrowers were left out of this limited waiver; those borrowers can still apply, but old application rules remain. Student loan experts are unsure why parent PLUS borrowers were excluded.
Betsy Mayotte, president and founder of The Institute of Student Loan Advisors, says the waiver solves “operational issues we’ve seen up to now that have plagued the PSLF program,” but still encourages borrowers to be aware of all the details of PSLF rules for the best chance of getting their loans discharged.
Borrowers who are eligible for relief under the new limited waiver must submit a PSLF form by Oct. 31, 2022, to qualify. Beginning immediately, borrowers can consolidate their student loans via the federal student aid site and submit the PSLF form to certify employment and apply for PSLF.
Federal student loan payments are paused through Jan. 31, 2022. During this forbearance, which began March 2020, each month of nonpayment counts toward forgiveness.
Borrowers should also remember this: You never have to pay anyone to apply for PSLF, consolidate your debt or access the benefits of the PSLF waiver. Any company promising to do the work for you is a scam.
The Department of Education under Secretary Miguel Cardona has updated other existing discharge programs, including:
More changes are expected to be made to PSLF by the end of 2022, according to the Department of Education.
Following in the footsteps of fellow federal loan servicers Navient and GSMR, FedLoan, the private servicer managing all loans for borrowers on track for PSLF, is ending its contract after Dec. 31, 2021. That means borrowers seeking PSLF will have a new servicer. Before losing access to your FedLoan account, download all payment records to ensure nothing gets lost in the transition.
Loan servicer MOHELA is taking on the FedLoan portfolio, according to the department, but it’s still unclear which servicer will be managing PSLF in the future.
Borrowers should update the contact information in their Federal Student Aid, or FSA, accounts to receive information directly from the government about the PSLF waiver.
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HENDERSONVILLE, Tenn. (WKRN) — A Goodlettsville man accused of impersonating police is denying the allegations.
Christopher Young is out on bond facing criminal impersonation, stalking, and false imprisonment charges in Hendersonville.
NASHVILLE, Tenn. (WKRN) – This year Middle Tennessee has seen an above-average number of tornadoes.
However, none of them have been as devastating as those that occurred during the night of March 2nd and 3rd of last year.
NASHVILLE, Tenn. (WKRN) — Metro Police have now charged the parents of a baby who was left in an unlocked, running car, while they shopped for groceries at a Kroger in East Nashville Wednesday night.
News 2 has been following the incident at every turn since the report first came in around 10 p.m. Wednesday.
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