New bill aims to help military service members on active duty
A new bipartisan bill proposed by Senators Maggie Hassan (D-NH) and Marco Rubio (R-FL) hopes to ease the military’s path to student loan forgiveness, Yahoo Finance has learned.
“Service members take enormous risks to protect our freedoms, and it is unacceptable that members of the military can return home after active service and not be closer to receiving a loan cancellation,” said Senator Hassan in a statement provided to Yahoo Finance. “This bipartisan bill is a common sense solution to helping some of our country’s most deserving public servants get off their student debt burdens faster.
The PSLF Military Service Recognition Act, officially introduced on Thursday, aims to help military borrowers take advantage of the Public Service Loan Forgiveness Program (PSLF) by counting the deferral or withholding of military student loans during deployment “as eligible payments to the PSLF so that military personnel who deploy ensure that their periods of service are duly taken into account in the release of their loan.”
The PSLF program allows government and nonprofit employees with federally guaranteed student loans to request the remission after they have substantiated 120 monthly payments as part of a qualifying repayment plan.
As of January 2020, according to a recent Government Accountability Report (GAO), 176,906 active duty members held federal loans eligible for the PSLF.
However, few applied and only a few were canceled. In addition, loans suspended or forbidden during deployment are not currently considered eligible payments for the PSLF.
“Currently, serving members of the military who suspend student loan payments while deployed are getting the small end of the stick when it comes to benefiting from the public service loan forgiveness program,” said Senator Rubio in a statement to Yahoo Finance. “It shouldn’t be – our service members make an incredible sacrifice to serve our country, and we must do everything in our power to recognize their service and provide them with the opportunity to forgo their loans.”
If the bill is signed into law, the Department of Defense and Education (ED) would decide how to implement the change for affected service members and whether it would be automatic for future applicants or require a change. opt-in. It is not known how many active duty members would be affected by the law.
‘A major warning sign ‘
The level of failure of the PSLF program, both in general and for the military, is staggering.
Over 98% of all requests from the general public – including teachers, firefighters, police and other officials – are rejected.
“We have quite a story documenting how the promise to forgive utility loans was broken for borrowers across the country,” Seth Frotman, executive director of the Student Borrower Protection Center (SBPC), told Yahoo Finance in November. 2020. “But the failures of the student loan administration have been particularly hard on military borrowers, both military and veterans.
Of the 176,906 active service members on federal loans eligible for the PSLF, according to the recent GAO report, only about 19,000 service members have opted for the PSLF. (The majority of these requests were from military personnel in the Army, followed by the Air Force, Navy, and Marine Corps.)
Of those who applied for forgiveness after 120 qualifying payments – which requires borrowers to submit an Employment Certification Form (ECF) on an annual basis or when borrowers change employers – only 124 member requests of the military service have been approved. (The most common reason for denial, according to the GAO report, was “insufficient qualifying payments, missing information such as a signature on the form, and no qualifying loans”).
The fact that only 124 active duty members have had their loans discharged through the PSLF “is a major warning sign,” said Mike Saunders, director of military and consumer policy at Veterans Education Success at Yahoo Finance. “More than 200,000 people currently in service have federal student loans. It has been over four years since the PSLF program should have started forgiving student loans of those who perform the preeminent public service.”
Military service members hold about $ 3 billion in student loan debt, according to the SBPC.
“What’s so infuriating about this is that the Education Department knows every military borrower because they have to match up for the purposes of the Military Civilian Relief Act,” Frotman told Yahoo Finance . “The federal government has all the information it needs to determine and determine who is eligible for a utility loan rebate. But instead, they allowed – for over a decade – members of the military to languish in this broken system.
Saunders added that Veterans Education Success “calls on the Department of Education to use the existing authority of Congress to ensure that federal student loan holders who have served on active duty since 2007 get credit for the PSLF. And We welcome more bipartisan action from Congress to ensure that now more active duty members get the credit for the PSLF than they have earned. “
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, Youtube, and reddit.