First wave of borrowers secures $ 715 million in student loan cancellations as part of new program expansion
Borrowers are finally starting to get their student loans canceled under a new expanded program recently announced by the Biden administration.
Biden’s expansion of student loan forgiveness program for public service workers: a breakdown
Last month, the Biden administration announced a further expansion of the Public Service Loan Forgiveness Program (PSLF), which can write off federal student loan debt for borrowers after 10 or more years of qualifying employment in the civil service for non-profit or public organizations.
Historically, the PSLF program has had confusing eligibility criteria, and it suffered from low approval rates for years. But under the new “Limited PSLF Waiver” program, announced by the Department of Education on October 6, the administration is temporarily relaxing some of the requirements of the PSLF program, allowing borrowers who have made payments on federal student loans non-direct (the “wrong” type of loan, such as FFEL or Perkins loans), or as part of a non-income repayment plan (the “bad” repayment plan) so that these payments are potentially accounted for. The Ministry will also count payments that were previously rejected for technical reasons, such as meeting deadlines.
Borrowers Begin Receiving Student Loan Discount Under Expanded PSLF Program
This week, thousands of borrowers began receiving notices that their federal student loans have been canceled under the limited PSLF waiver program. A source from the Department of Education confirmed that about 10,000 borrowers received $ 715 million in student loan forgiveness. Another 20,000 borrowers are expected to receive an additional $ 1.2 billion student loan forgiveness soon.
The ministry had previously said that for direct loan borrowers who have already certified their employment for the PSLF program, officials would review borrowers’ accounts for rejected payments and adjust a borrower’s total number of eligible payments accordingly.
Melissa, a borrower from southern Illinois (she declined to give her last name), was told on November 8 that her federal student loan balance of $ 84,000 had been canceled under the Limited PSLF program. Waiver. Melissa had initially consolidated her federal loans through the FFEL program; she did not know at the time that FFEL loans were not eligible for the PSLF. She had to reconsolidate her loans through the Direct Consolidation Loan program in 2012 to qualify for the PSLF – but none of the payments she made between 2007 and 2012 would count, even if she had worked for the state government. during this period. “I was in a state of disbelief that none of the payments from previous years would count,” she said.
Under the limited PSLF waiver program, however, its pre-2012 payments on its FFEL loans would count toward the 120 “eligible payments” required to obtain a loan waiver. Since she had already certified her employment with the Ministry of Education, the ministry could begin to apply these payments. But nothing happened for weeks, so Melissa filed a complaint directly with the Department of Education. This week, her balance of $ 84,000 was finally canceled. Melissa’s loan balance had actually gone from $ 70,000 in 2012 to $ 84,000, despite payments of $ 16,000.
Melissa thought that would never happen. “I have three kids … and I’m starting to think about how we’re going to pay for their college, and having this time to save for them instead of continuing to pay off my loans is huge,” she said. declared.
Other borrowers reported similar experiences this week. On a Reddit thread, dozens of borrowers have shared stories about canceling their federal student loans under the new PSLF Limited Waiver. “$ 153,000 forgiven this morning! Said a user named No-Contract-586. “No letter or email at this time, but the account says paid in full / balance $ 0. ”
“$ 106,000 forgiven,” user Writtenbyrabbits said. “Initial loan amount of $ 80,000. Paid for 15 years. And my balance was $ 106,000 yesterday morning. Alleluia.”
Other borrowers will need to take action to have their student loans canceled under the PSLF waiver
While the ministry has automatically granted this relief to eligible borrowers, for many other borrowers some form of action will be required to get their student loans canceled under the PSLF Limited Waiver. Borrowers who still have FFEL or Perkins program loans will likely need to consolidate those loans through the Federal Direct Consolidation Program and then submit a PSLF Employment Certification. Meanwhile, direct loan borrowers who have not certified all of their past and present public service jobs will also need to submit PSLF employment certification forms. Borrowers must act before October 31, 2022.
The ministry has not released full details on how it will continue to implement the limited PSLF waiver program over the next few months, particularly for borrowers who need to consolidate their loans or take other steps before the end of the year. October 31, 2022. Earlier this week, ministry officials pledged they were still working to roll out the benefits of the program and would release more information in the weeks and months to come. In the meantime, the current Ministry guidelines can be consulted. here.
Student Loan Forgiveness Changes: Who Qualifies and How to Apply for Biden’s Relief Extension
Student Loan Waiver: Did you receive a “good news” email from the Department of Education? Others are on their way.
Biden’s $ 11.5 billion student loan forgiveness: some automatic, some not. Here is a breakdown.
What the student loan forgiveness note means for massive student debt cancellation