Eligible for Civil Service Loan Forgiveness? You may need to act sooner than you think
The Civil Service Loan Cancellation Program has now canceled a total offor more than 127,000 borrowers. After rule changes in October 2021 and again in April this year, loan forgiveness has been extended to even more public servants – such as teachers, government workers, first responders and firefighters – who don’t. were perhaps not eligible for the PSLF program.
The initiative to extend debt relief to more eligible public service workers began last fall and continued into the spring, when the PSLF program improved monitoring of borrowers in income-based repayment plans and those who have been improperly forborne by lenders.
If you want to apply for forgiveness through the expanded PSLF waiver, you have until October 31, 2022. But if you have Perkins or FFEL loans, you’ll need to consolidate them into direct loans first before you apply. . According to Martin Lynch, director of education at Cambridge Credit Counseling Corp., you should consolidate your loans “by the end of the first week of September, as the consolidation process can take 45 days.”
How do you know if you qualify for loan relief through the expanded PSLF program? And how can you be sure to apply on time? Here’s what to know about canceling public service loans. To find out more, here .
What is the PSLF program?
The PSLF program, first launched in 2007, was designed to help civil servants repay their loans faster. The program works by providing loan forgiveness to eligible government officials who have made 120 eligible student loan payments. Yet nearly 99% of borrowers who applied since 2008 were turned down before the October expansion.
Who is eligible for the PSLF?
To qualify for the PSLF, you must be employed full-time by a U.S. federal, state, local, or tribal government agency—this includes the military—or nonprofit organization. You must have Federal Direct Loans or other types of federally guaranteed loans that have already been consolidated into Direct Loans and you must make 120 qualifying payments (10 years of payments). Examples of eligible borrowers for the PSLF are workers like teachers, nurses, and firefighters who serve their local communities.
Who is eligible for student loan forgiveness under the new PSLF terms?
Borrowers in government jobs may be able to receive forgiveness for FFEL, federally guaranteed loans from private lenders, Perkins loans, and other non-standard or non-targeted repayment plans. income for federal loans under the expanded waiver. (Note: the waiver only applies to federal loans, which make up the vast majority, more than 90%, of total student loan debt.)
Borrowers can also receive credit for past payments and periods of employment, such as active military service, for which they would not have qualified in the past.
The easiest way to determine if you qualify is to apply for the Limited Waiver. Completing the waiver will help you do things like consolidate different types of loans or certify previous periods of employment for credit.
How do I apply for a PSLF pardon? Is there a time limit?
The Ministry of Education has a dedicated tool to guide your request for a limited waiver. The deadline to apply for the waiver is October 31, 2022, but the sooner you apply, the better. Some borrowers may not have to do anything to have their loan cancelled, but it’s a good idea to confirm your specific details.
If you have FFEL or Perkins loans, you will need to consolidate them into direct loans. This process can take several weeks, and Lynch recommends completing the process “at least 45 days before filing the PSLF application.” This means that you should take steps to consolidate no later than the first week of September to ensure you have enough time to file.
How do I consolidate my non-direct loans?
You can consolidate eligible federal student loans into a direct loan online at the Federal Student Aid website – you can find the consolidation application here. This will combine your existing federal loans into one direct loan with one interest rate and one monthly payment. By consolidating into a single direct loan and then applying for the expanded PSLF waiver, your past payments can now count for loan forgiveness, as long as you are in eligible government employment.
Does the current student loan payment suspension affect my eligibility for PSLF?
No. Federal student loan repayments have been on hold for more than two years and are currently set to expire . Under the PSLF, each such suspended payment counts as an eligible loan payment during that period. So if your payments were suspended for 26 months, that counts as 26 payments on time, bringing you closer to your goal of 120.
What if I didn’t receive credit for past payments?
In the past, if you made payments but your loan officer had incomplete or inaccurate records, you had almost no recourse to counter their claims. Now, with the limited waiver, you can apply for forgiveness and have your payments count towards your debt and forgiveness.
Which loans are eligible for the PSLF?
Previously, only direct loans with a standard or income-driven repayment plan were eligible for PSLF. However, for a limited time, you may be able to receive credit for past payments on federal loans that were not previously eligible for PSLF, regardless of your repayment plan. Borrowers with FFEL, Perkins, and other non-direct Federal loans must consolidate their loans through the Direct Consolidation Program before applying for the expanded PSLF waiver.
What other policy changes should I know about?
The Ministry of Education said in its statement that it will continue to roll out and update its policies in the coming months as it attempts to get the PSLF program back on track.
Correction, January 25: This article previously stated that private loans would be eligible for student loan forgiveness under the new waiver. It was wrong. In addition to direct loans, only FFEL loans – which are federally backed, but often issued by private lenders – Perkins loans and other federal loans are eligible for the PSLF exemption.