100,000 borrowers now eligible for student loan forgiveness under PSLF waiver: Education Department
The Department of Education confirmed on Wednesday that 100,000 borrowers are now eligible for $6.2 billion in student loan forgiveness under a program benefiting public service workers.
Under the Public Service Loan Cancellation Program (PSLF), civil servants can get their student debt balance canceled after making 120 qualifying payments on their loans. This would effectively allow PSLF applicants to obtain student loan forgiveness after 10 years of repayment.
“Today’s PSLF announcement means that more of our teachers, nurses, first responders, service members and many other dedicated public service workers will benefit from significant relief.”
The Biden administration overhauled the program last October with a limited PSLF waiver that made it easier to qualify for a loan discharge by giving borrowers credit for prior repayment periods. Prior to the changes, approximately 98% of PSLF applications were rejected.
“Our country’s public service workers must be able to rely on the promise of public service loan forgiveness,” Education Secretary Miguel Cardona said. “The Biden-Harris administration is delivering on that promise by helping more and more eligible borrowers get their loan balances forgiven.”
Keep reading to learn more about PSLF and see if you qualify for this program. If you don’t qualify for student debt forgiveness, consider other options like income-contingent repayment and student loan refinancing. You can compare student loan refinance rates on Credible for free without affecting your credit score.
THIS IS THE AVERAGE STUDENT LOAN DEBT IN EACH STATE
Who is eligible for the PSLF program?
Public Service Loan Forgiveness allows certain borrowers to qualify for a federal student debt discharge after making payments on their loans for a 10-year period. The program is available to public service workers like nurses, teachers, military personnel, first responders, and nonprofit employees. To be eligible for the PSLF, borrowers must:
- Be employed full-time by a federal, state, local, or tribal government or nonprofit organization
- Have direct loans or consolidate other federal loans into the direct loans program
- Pay off your debt through an Income Driven Repayment (IDR) plan
- Make 120 payments while employed full-time by an eligible employer
Last year, the Ministry of Education changed the rules for the PSLF program “for a limited time due to the COVID-19 national emergency”.
Under the limited waiver, any previous payment made by a PSLF applicant would be considered an eligible payment, regardless of loan type, repayment plan, or whether the payment was made on time and in full. To be eligible, borrowers will need to transfer their federal student debt, such as Federal Family Education Loans (FFEL) program loans or Federal Perkins loans, into a direct consolidation loan by October 31, 2022. .
As a result of these changes, the department estimates that more than 550,000 borrowers are two years closer, on average, to obtaining student loan discharge. And on March 9, the ministry announced that it had now identified 100,000 borrowers eligible for forgiveness under the PSLF.
You can see if you qualify for this program by using the PSLF Help Tool. If you do not meet the PSLF eligibility requirements, you may be considering other ways to manage your student debt. One strategy is to refinance a private student loan at a lower interest rate.
Although student loan refinancing may help you repay your debt on more favorable terms, it would render you ineligible for certain government protections such as IDR plans, deferment, COVID-19 administrative forbearance, and federal programs. student loan cancellation like the PSLF. You can read more about student loan refinancing on Credible to determine if this method of debt repayment is right for your financial situation.
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How to manage your student debt if you don’t qualify for the PSLF
Although the Biden administration has made it easier for some borrowers to qualify for the PSLF program, millions of Americans still carry student loan debt. If you don’t qualify for the PSLF, consider these alternative student loan repayment strategies:
Learn more about each method in the sections below.
Sign up for income-oriented reimbursement
Federal student loan borrowers may be able to limit their monthly payments to 10-20% of their disposable income by enrolling in an IDR plan. Federal Student Aid (FSA) offers four types of IDR plans: Pay As You Earn Revised Repayment Plan (REPAYE Plan), Pay As You Earn Repayment Plan (PAYE Plan), Income Based Repayment Plan (IBR Plan), and reimbursement based on income. Plan (ICR Plan).
The plan you qualify for depends on the type of student loan you have. Under these plans, you may be eligible to pay off your remaining federal student debt after making payments for 20 or 25 years. You can register for an IDR plan by logging into your account on the FSA website.
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Research Your Other Student Debt Cancellation Options
The PSLF is just one of many student loan forgiveness programs offered by the federal government. The Department of Education has forgiven $16 billion in student loan debt for approximately 680,000 borrowers since President Joe Biden took office under the PSLF and the following programs:
- Total and Permanent Disability Program (TPD). Borrowers who are totally and permanently disabled may be eligible for cancellation of their federal student loans. More than 400,000 borrowers have qualified for $7.8 billion in student loan forgiveness through TPD waivers.
- Defense of the borrower in the repayment program. If you were misled by a school that engaged in misconduct during your enrollment, you may be eligible for a borrower’s defense release. The Biden administration has approved $2 billion in debt relief for more than 107,000 borrowers under this program.
- School break program closed. You may qualify for student loan relief if your school closes while you are enrolled or shortly after you withdraw. About 115,000 students who attended the now defunct ITT Technical Institute received $1.26 billion in pardons under Biden.
Additionally, Biden campaigned to forgive $10,000 in student loan debt per borrower as a presidential candidate. Although the president has yet to sign into law widespread student debt cancellation, White House Chief of Staff Ron Klain recently said Biden is still considering student loan relief.
47,000 VETERANS AND ACTIVE DUTY TROOPS TO AUTOMATICALLY RECEIVE STUDENT LOAN RELIEF
Refinance your student loan
Student loan refinancing involves taking out a private student loan to pay off your current student debt. Refinancing at a lower interest rate can help you lower your monthly payments, pay off debt faster, and save money over the life of the loan.
Private lenders determine student loan refinance rates based on the amount and term of the loan, as well as the creditworthiness of the applicant. Well-qualified borrowers with good credit will see lower rates, while those with bad or fair credit may not qualify. If you don’t meet the eligibility requirements, you might consider refinancing your student loans with a creditworthy co-signer.
It is important to remember that refinancing your federal student debt into a private loan would make you ineligible for the current zero interest forbearance period and all federal student loan forgiveness measures. But if you already have private student loan debt, it may be worth refinancing on more favorable terms.
You can compare current student loan rates from several private lenders in the table below. Then you can use Credible’s student loan refinance calculator to estimate your new monthly payment and potential savings.
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