Public Service Loan Forgiveness
If you are employed by a government or not-for-profit organization, you may be able to receive loan forgiveness under the Public Service Loan Forgiveness Program.
The Public Service Loan Forgiveness Program forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.
Note: Servicing for this program is managed by another federal student loan servicer. If you enroll in Public Service Loan Forgiveness, your eligible loans will be transferred from Great Lakes to that servicer. Also note, you may not receive a benefit for the same qualifying payments or period of service for Teacher Loan Forgiveness and Public Service Loan Forgiveness.
Cares Act Automatic Federal Student Loan Forbearance
If you have a student loan owned by the U.S. Department of Education, the government has granted you automatic forbearance on this loan under the Coronavirus Aid, Relief, and Economic Security Act. The forbearance was set to expire on Jan. 31, 2021, under the previous administration, then it was extended under the Biden administration until Sept. 30, 2021.
The administration extended the forbearance period again on Aug. 6, allowing loans to stay in forbearance until Jan. 31, 2022.
Between March 13, 2020, and January 31, 2022, no interest will accrue, and you don’t need to make any payments. No late fees will apply if you stop paying during this period. You’ll know you have this benefit if you see a 0% interest rate when you log in to your student loan account. On March 30, 2021, the Department of Education extended this benefit to defaulted privately held loans under the Federal Family Education Loan Program.
Under normal circumstances, you can’t make progress toward loan forgiveness during forbearance. But under the CARES Act, you can. You’ll receive credit toward income-driven repayment forgiveness or public service loan forgiveness for the payments you normally would have made during this period.
There may be tax obligations tied to any loan forgiveness.
Borrowers Defense To Repayment
This loan forgiveness program aims to protect students whom the schools misled. During recent years, the school officials lied to debtors to convince them to enroll. They misinformed students about the actual cost or quality of education, job replacement rates, transferability of credits, etc.
This program prospered during Obamas administration, but in recent years, the program lost its attractiveness. The Education Department delayed the application review process and mostly rejected the applications. Many borrowers could not get forgiveness in high percentages, although their applications were successful.
Since Biden became the President, he aimed to improve this forgiveness program and help borrowers. As a result, many applicants received forgiveness through this program. Besides, the ED granted complete forgiveness to those who received only partial discharge before.
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Full Debt Forgiveness For Approved Borrower Defense To Repayment Discharge Claims
The Trump administration implemented a scheme in which defrauded borrowers received only partial forgiveness of their loans. The partial relief methodology was flawed. The U.S. Department of Education has decided that all borrowers whose borrower defense claims were approved will receive a full discharge of their loans. This will affect 72,000 borrowers who were subject to predatory student lending.
Do You Work Enough Hours To Qualify
In order to qualify for Public Service Loan Forgiveness, you have to work at least 30 hours a week at least eight months of the year. You are able to combine hours from multiple employers that qualify as public service employers.
Any time spent participating in religious instruction, worship services, or any form of proselytizing does not count toward your 30 hours a week.
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Student Loan Repayment Assistance Programs For Teachers
The Teacher Forgiveness Program isnt your only option for student loan help. Many states also offer loan repayment assistance for teachers. Most of these programs require state licensure, as well as a commitment to working for two years in a qualifying area.
The Teach for Texas Program, for example, gives yearly assistance to teachers in designated shortage areas.
To find programs in your state, check out the full list of loan repayment assistance programs and filter the results by occupation.
Existing Federal Student Loan Forgiveness Programs
If a borrower expects to receive loan forgiveness under President Biden, they can stop making federal student loan payments during the payment pause and interest waiver period, which was extended through September 30, 2021. However, given the uncertainties around student debt cancellation, borrowers may want to continue making payments.
But, some borrowers may be eligible for an existing student loan forgiveness program. For example, Public Service Loan Forgiveness is available to borrowers who work full-time in a qualifying public service job. A borrower is eligible for loan forgiveness after making 120 qualifying payments.
During the payment pause, borrowers can still earn credit toward PSLF. As long as they continue to meet the eligibility requirements and submit the PSLF form, they will receive qualifying payment credit.
Borrowers who will not qualify for loan forgiveness when the relief period ends can also consider an income-driven repayment plan. With an income driven repayment plan, monthly payments are adjusted based on the borrowers annual income. After a specified period of time the debt is forgiven.
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Military Student Loan Forgiveness And Assistance
Not only does the military offer loan forgiveness for Army and Navy doctors, but it also helps armed forces members and veterans. The Army, Navy, Air Force and National Guard all offer loan repayment assistance programs.
- The Armys College Loan Repayment Program pays one-third of your loans every year for three years. In total, you could get up to $65,000 in aid.
- The Navy program also awards up to $65,000.
- The National Guard LRAP contributes up to $50,000.
There are plenty of other programs for military student loan forgiveness, so make sure you know what you qualify for.
Bidensproposal Would Eliminate Student Loan Debt For Almost One
Almost one-third of federal student loan borrowers owed less than $10,000 in 2020, according to Department of Education data. Half of all borrowers owed between $10,000 and $60,000. On the other end, 7% of federal student loan borrowers owed over $100,000. These borrowers combined to account for 37% of federal student loan debt.
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Restoration Of Total And Permanent Disability Discharges
Some disabled borrowers who qualified for a Total and Permanent Disability Discharge had their repayment obligation reinstated because they failed to submit the annual earnings paperwork during the pandemic. The U.S. Department of Education will reverse the reinstatements and provide other student loan debt relief for 230,000 borrowers with Total and Permanent Disability Discharges.
Student Loan Forgiveness Is Now Tax
The latest stimulus package included a big win for student loan borrowers. Any student loan cancellation is now tax-free through December 31, 2025. So, if you get student loan cancellation from Congress or the president, you would not owe any income tax on the amount of student loan forgiveness you receive. In contrast, before Warren and Sen. Bob Menendez proposed this provision, student loan borrowers could have owed income tax on their remaining student loan balance that was forgiven. This tax-free provision also applies to student loan forgiveness through income-driven repayment plans such as IBR, PAYE, REPAYE and ICR. Student loan forgiveness through the Public Service Loan Forgiveness program already is tax-free.
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Im In The Military And Didnt Make Payments While On Active Duty Has Anything Changed
Yes more good news here. Servicers sometimes told members of the military to defer their loans or put them in forbearance if they were worried about making payments on time during a deployment. But that meant missing credit toward the 120 payment figure that yields the tax-free debt forgiveness.
Now, the Education Department plans to look back at these accounts and issue credit where appropriate for the time active members of the military were in deferment or forbearance. It will do this going forward as well.
Refinance Student Loan Debt
Refinancing allows borrowers to get rid of existing debt and roll the balance to a new loan. Preferably, the new loan should have a lower interest rate to save money in the long run. Generally, a high credit score and stable income are required.
If you have private loans, you can enjoy refinancing immediately. However, do not prefer using this method for your federal loans. If refinancing, you will lose non-repayment benefits on your federal student loans, and you will no longer qualify for direct forgiveness.
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Other Biden Officials Are Not Taking Student Loan Forgiveness Off The Table
Still, earlier this week, in remarks to The Atlantic staff writer Adam Harris, Bidens Secretary of Education Miguel Cardona indicated that student loan forgiveness is not off the table. We recognize that student debt is holding people back, he said. So were focused and its a priority for me, and for President Biden to make sure that part of the conversation is examining loan forgiveness. Those conversations are continuing.
The fact that Secretary Cardona did not shut the door on student loan forgiveness is noteworthy, but the meaning of his statement is ambiguous. The Biden administration has already announced over $11 billion in student loan forgiveness by using executive action to expand relief to more borrowers under existing federal loan relief programs. This targeted student loan forgiveness will directly benefit hundreds of thousands of student loan borrowers, and officials may be looking at additional ways of expanding relief in similar ways. Still, this $11 billion in student loan forgiveness amounts to a tiny fraction of the $1.8 trillion in estimated total outstanding student loan debt, and has so far fallen far short of mass, across-the-board debt cancellation that advocates have been calling for.
An Abundance Of Caution
Nothing changed, though, and Biden has continued to face pressure on the issue from within his own party. In April, Warren went so far as releasing data obtained from the Education Department showing the congressional plan would wipe out the entire student debt burden for more than 80% of borrowers. Bidens plan, meanwhile, would zero out the bills of 33.4% of borrowers.
Biden likely is waiting for Congress to take up forgiveness, or for a clear-cut path to emerge that would allow him to cancel the debt without any legal challenges, Mayotte said. The legislative route would be incredibly hard, due to Democrats slim margins in both the House and Senate and opposition from Republicans, who believe blanket forgiveness would be a bailout burdening taxpayers. Moreover, if forgiveness legislation were to wind up in court it would create a mess, Mayotte said, since theres no playbook for what would happen if Biden canceled debt for millions of borrowers only to have the courts declare the move unconstitutional.
I dont blame him for having an abundance of caution, Mayotte said.
Nick Brackett, an elementary school teacher from New Jersey with $90,000 in student debt, said the legal questions and debate within the Democratic party havent affected him, because hes stopped paying attention to the issue. Tired of the discourse around student loan forgiveness, he said he has resigned himself to whatever happens.
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Borrower Defense To Repayment
If you believe that the school you attended misled you or engaged in misconduct in violation of certain laws, the federal student loans you obtained to attend that school may be eligible for forgiveness, called Borrower Defense to Repayment. Learn more about the process, eligibility requirements and how you can apply.
How Would Debt Cancellation Impact The Economy
Critics of loan forgiveness say it would lead to a loss in federal revenue that could hurt down the line, either in the form of higher taxes or less spending on other important government aid.
âBlanket loan forgiveness is not the answer,â said Republican Sen. John Thune, R-S.D., on the senate floor after Democrats first introduced their proposal. âI hope President Biden will resist Democrat calls to put taxpayers on the hook for billions of dollars in student loans.â
âIf the government takes in less revenue, the government has to either raise other revenue or cut spending. That means either taxes are going to go up, or other programs are going to be cut,â said Constantine Yannelis, an economist at the University of Chicago who recently published an analysis of which earners student debt cancellation would benefit.
âThere are other policies which target debt forgiveness to lower income individuals,â he said, pointing to an expansion of income-driven repayment plans as one solution.
Proponents, meanwhile, say forgiveness will boost the economy.
âWe want people to be buying homes, for example, which is the single biggest generator of wealth in this country historically,â Rep. Jones told Spectrum News.
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The Us Department Of Education Announced A Host Of Changes Wednesday To The Public Service Loan Forgiveness Program Which Guarantees Debt Forgiveness To Qualifying Public Sector Employees
The U.S. Department of Education on Wednesday announced sweeping changes to a student loan forgiveness program, an overhaul officials said could mean financial relief for more than half a million borrowers working for government entities or nonprofits.
The Public Service Loan Forgiveness program, established in 2007, promised to forgive student loans for qualifying public sector workers who made their federal student loan payments on time for 10 consecutive years.
But the program was plagued with problems from its inception, drawing criticism from advocates who said the system was difficult to navigate and often left qualified borrowers ineligible for debt forgiveness after a decade of regular payments. More than 98% of people who applied for loan forgiveness under the program were rejected, according to federal data, including thousands of teachers. Many of them were turned away for small mistakes, like checking the wrong box on an application or failing to date a signature.
Borrowers who devote a decade of their lives to public service should be able to rely on the promise of Public Service Loan Forgiveness, U.S. Secretary of Education Miguel Cardona said in a statement Wednesday. The system has not delivered on that promise to date, but that is about to change for many borrowers who have served their communities and their country.
Welcome News for Borrowers
Kate Elizabeth Queram is a senior reporter for Route Fifty and is based in Washington, D.C.
Circumstances For Student Loan Discharge
- Permanent disability or death
- Unauthorized signature of the loan by the school without your knowledge
- False certification of student eligibility
- Unpaid refund, which is when you withdrew from school and it didnt return the required loan funds to your loan servicer
- School closure while you were enrolled
Discharging student loans through bankruptcy is extremely rare. It is technically not impossible, but demonstrating undue hardship is very difficult. Read more about the differences between forgiveness and discharge.
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Nonprofit Employees With Student Loan Debt:
Make sure you have the correct loan type and then are on track for eligibility by submitting the Employment Certification for Public Service Loan Forgiveness form . Submit this form periodically during employment once you do this, the student loan program will contact you to let you know if your loan repayments are on track to qualify as PSLF payments. Learn more:
Can President Joe Biden Forgive Student Loans
11 Minute Read | September 24, 2021
Another day, another whisper about whether or not President Biden can forgive student loans. And this issue still looks like a political hot potatowhere everyone wants the credit for the idea but nobody wants the heat of handling the job itself.
Maybe Biden can forgive student loans. Maybe he cant. But one things for sure: Waiting on somebody from the government to fix your money problems is no way to go through life. And even though some targeted student loans have been canceled for specific groups of borrowers, that might not mean that the president can erase student loan debt across the board.
Lets see what Biden and other elected officials are actually saying about student loans these daysand how their proposals could impact your own budget.
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Will Student Loans Be Forgiven
The direct answer to this question is uncertain for now. It seems like direct forgiveness has a long way to go considering current conditions. Before explaining these scenarios, lets first understand how the direct loan forgiveness issue became considerable.
First, the discussions started when Joe Biden posted a tweet supporting $10,000 forgiveness. This tweet was published before he was selected. Hence, once he became the President, borrowers hoped the President would grant the long-waited loan forgiveness.
Additionally, we should forgive a minimum of $10,000/person of federal student loans, as proposed by Senator Warren and colleagues. Young people and other student debt holders bore the brunt of the last crisis. It shouldn’t happen again.
Joe Biden
However, the President has not made any progress for loan forgiveness since January. Yet, he provided other benefits. For example, when everyone expected 1-2 months of extension to loan forbearance, the President granted eight more months. Then, he prolonged non-repayment till 2022.
Who Is Eligible For Student Loan Forgiveness
The government previously restricted eligibility for the Public Service Loan Forgiveness program to only certain types of federal student loans and specific repayment plans.
However, through October 2022, borrowers who have made 10 years worth of payments while in a qualifying job such as positions in federal, state or local governments, a nonprofit organization or the U.S. military will now be eligible for loan relief no matter what kind of federal loan or repayment plan they have.
Past loan payments that were previously ineligible will now count, moving some borrowers closer to forgiveness. That is expected to especially help those borrowers with Federal Family Education Loans.
Among other changes, the department will allow military members to count time on active duty toward the 10 years, even if they put a pause on making their payments during that time.
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