This program was created to provide relief to public servants such as teachers, nurses, firefighters and others who serve their community through public service jobs. The program cancels their student loans after ten years of public service but it has caused confusion over the years, prompting the administration to make changes.
“We will offer a time-limited discount so that student borrowers can calculate payments from all federal loan programs or repayment plans,” the Department of Education announced. “This includes loan types and payment plans that were not previously eligible. We will pursue opportunities to automate PSLF eligibility, give borrowers a way to correct errors and allow members of the military to receive credit for forgiveness while in service. We will combine these changes with an expanded communication campaign to help affected borrowers learn about these opportunities and encourage them to apply.”
Student loan forgiveness is only available for federal student loans. Private student loan holders can find other ways to reduce their payments, such as through refinancing. Visit Trusted to see how much you can save on your monthly payment.
Over 500K borrowers will benefit from the changes
To receive student loan forgiveness, borrowers must make 120 periodic qualifying payments on an income-driven repayment plan. But because of the complex nature of the program’s eligibility rules, many borrowers made loan payments that didn’t count toward the 120 requirement. This is because the payment had to be made for the direct loan and not the Federal Family Education Loan (FFEL) or Federal Perkins Loan.
The Department of Education is now simplifying those rules and applying them retroactively to payment borrowers made for any federal loan, not just a federal direct loan, to the remainder of their required payments.
The department estimates that this change will help more than 550,000 student loan borrowers see immediate progress toward meeting their 120 payments. The average borrower will see 23 additional payments in their total payment. And about 22,000 borrowers can have their federal student loans discharged immediately, the department said. These actions will contribute to a total of $1.74 billion in student loan forgiveness.
If you have private student loans and do not qualify for loan forgiveness, refinancing can help you reduce your monthly payments. Visit Credible to Compare Multiple Lenders at Once And see how much you can save.
Other changes from overhaul
Another point of confusion from the PSLF program was the employment of a borrower, resulting in uncertainty about who was eligible. Under the new changes, about 27,000 borrowers could qualify for $2.82 billion in loan cancellations by showing full-time employment certification for an additional period of time, the department said.
According to the administration, more than 16,000 borrowers have received waivers under the PSLF program so far. With these changes, it is now anticipated that many more people will receive the credit.
U.S. Education Secretary Miguel Cardona said, “Lenders who devote a decade of their lives to public service should be able to rely on the promise of public service loan forgiveness.” “The system has not delivered on that promise to date, but it is about to change for many borrowers who have served their communities and their countries. Teachers, nurses, first responders, service members, and many public service workers have specialized. We’ve got a pat on our back in the midst of the challenges of the pandemic. Today, the Biden administration is showing that we have their backs too.”
If you have private student loans and do not qualify for student loan forgiveness, consider refinancing to reduce your monthly payments. Get in touch with a trusted student loan specialist to talk to And get all your questions answered.
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