Last week’s news break by National Public Radio (NPR) that the U.S. Department of Education will offer a fix of the troubled public services loan forgiveness program proved to be true when the US Department of Education announced on Wednesday, October 6, new efforts that “Will Put Over 550,000 Public Service Workers Closer to Loan Forgiveness.”
The Department announced several actions, some more immediate regarding the overhaul of the Public Service Loan Forgiveness (PSLF):
A limited PSLF waiver that allows all payments by student borrowers to count toward PSLF. The waiver will allow student borrowers to count all payments made on loans from the Federal Family Education Loan (FFEL) Program or Perkins Loan Program. It will also waive restrictions on the type of repayment plan and the requirement that payments be made in the full amount and on-time for all borrowers. To receive these benefits, borrowers will have to submit a PSLF form by October 31, 2022. The Department recommends borrowers take this action through the online PSLF Help Tool, which is available at StudentAid.gov/PSLF.
Automatically providing credit toward PSLF for military service members and federal employees using federal data matches. The Department will implement data matches next year to give these borrowers credit toward PSLF without an application. The problems with this segment of the loan forgiveness program were featured on the Sunday, October 3, 2021 edition of CBS 60 Minutes.
Reviewing denied PSLF applications for errors and giving borrowers the ability to have their PSLF determinations reconsidered. These actions will help identify and address servicing errors or other issues that have prevented borrowers from getting the PSLF credit they deserve.
This loan forgiveness program, created when the Higher Education Act reauthorization was signed into law in 2008, covers people who work at governmental organizations (federal, state, local, Tribal), 501(c)(3) organizations, and a not-for-profit organization that provides specific public services. People do not have to work at the same company/agency for the ten-year period. Professions covered include people working for child welfare agencies, child care and Head Start workers, nurses, teachers, public health and mental health professionals and some attorneys working in public services to name just some of the eligible jobs.
If a person, working in a covered area of public service faithfully makes their monthly payments over 10 years (120 payments), the remainder of that loan was to be wiped away. The first set of eligible class of public servants was just a little more than three years ago but as it turned out, people were misinformed on which loan program they could be use, payments were not tracked well by the Department and information was not recorded accurately. Few people benefited. Before the pandemic, Congressman Danny Davis (D-IL) had worked to get some funding and temporary fixes for the program but problems have persisted.
The Department said this fall they will begin an extensive outreach campaign to make sure borrowers are better informed. This will include e-mail communications to borrowers who have hit 120 PSLF-eligible payments, they will also notify borrowers about any additional payments they will be able to automatically count and the option for reconsideration of denied applications, as applicable. In addition to the immediate actions, the Department will engage in a rulemaking process.
If you know that you have qualifying employment that you have not yet certified with the Department of Education, you should certify that employment now by using the PSLF Help Tool at www.StudentAid.gov/pslf. To find out more about loan consolidation visit StudentAid.gov/Manage-Loans/Consolidation, and you can go to the DOE Factsheet which has several other links if you have other question you can go to factsheet here.