100,000 student borrowers have had their debt canceled
Miguel Cardona, U.S. Secretary of Education, at the Queen Theater on December 23, 2020 in Wilmington, Delaware.
Joshua Roberts | Getty Images News | Getty Images
More than 100,000 borrowers will benefit from student debt forgiveness thanks to policy fixes made to the public service loan relief program.
The relief amounts to more than $6 billion, according to New data published by the US Department of Education.
Signed into law by then-President George W. Bush in 2007, the rebate program allows nonprofit and government employees to have their federal student loans forgiven after 10 years or 120 payments. The Consumer Financial Protection Bureau estimates that a quarter of American workers could be eligible.
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However, the program has been plagued with problems, resulting in few who actually benefit from the aid.
Borrowers often believe they are paying their way to loan forgiveness only to find out at some point in the process that they do not qualify, usually for confusing technical reasons. Lenders have been accused of misleading borrowers and pushing their deadlines.
More borrowers are now seeing their loans repaid after program reforms announced last year by the Biden administration.
Some of these changes include the reassessment of borrower deadlines and the counting of certain payments that were previously not eligible. (For example, the type of loan a borrower had or the repayment plan they were enrolled in often disqualified them, unbeknownst to them.)
For starters, you want to act fast, says Marc Kantrowitzhigher education specialist.
Indeed, the Biden administration’s new rules for canceling public service loans are due to expire on Oct. 31.
If you have a Federal Family Education Loan (FFEL) or a Federal Perkins Loan, which normally do not count towards civil service loan forgiveness but now do so temporarily, you will need to consolidate these into Direct Loans with your service agent.
“It usually takes 30 to 45 days for consolidation to occur,” Kantrowitz said.
“Borrowers should do this even if they don’t expect to have 120 payments by the deadline, as previously ineligible payments will only count if they do,” he added.
In addition, borrowers will also need to prove that their work has been considered a public service for the entire time they are trying to count for forgiveness. To do this, you will want to file with your repairer a so-called employer certification form for every job you’ve had throughout your timeline.
Borrowers currently unemployed or not working in government can still get a discount now, as long as they’ve made 120 eligible payments in the past, Kantrowitz added.
Also, keep in mind that months during the government payment pause and federal student loan interest relief, which have been in effect since March 2020, count toward the program, even if you don’t have paid.
Some borrowers seem to get forgiveness automatically after government verification of these accounts. Nonetheless, following these steps will ensure you benefit from it.