Teachers, government employees and those employed by nonprofits have only a few days left to apply for a one-time waiver that can help them erase or reduce their student loans.
The so-called “Limited Public Service Loan Forgiveness” was designed last year by the Biden administration to fix a major problem with a long-running program designed to reduce public servants’ college loans. Under the exemption, public sector employees can apply to get loans for past payments that were not earlier eligible for debt relief.
The deadline to apply for the exemption is October 31 – which means public employees have only three weeks left to seek relief.
President BidensThat would wipe out up to $20,000 in student loans for qualified borrowers, has attracted significant attention, but the administration’s efforts to help government employees with their college loan burdens have received less attention.
The Public Service Loan Forgiveness Program was established in 2007 with one noble goal: to forgive the student loans of Americans working in public service jobs – teachers, government employees or nonprofits – for at least 10 years. For. But the program became notorious for its Byzantine regulations as well as misleading guidance from some debt-servicing companies, which hindered many public servants’ ability to seek relief.
For example, a 2018 report by the Government Accountability Office, a government watchdog, found that while 1 million people applied for the program, only 55 had actually received debt relief at the time.
One reason for the disappointing results: Those who had consolidated their student loans found that their payments didn’t count into the program, making their fortunes worse.
What does the discount do?
The exemption reverses some of the restrictions on what types of loans and payments are eligible for the program.
The Department of Education states that “any prior period of repayment will count as an eligible payment, whether by loan program, repayment plan or whether you paid in full or on time.”
For example, people who have consolidated their loans will now be able to calculate their payments for the program. The Biden administration estimates it will help 550,000 workers who previously did not qualify because of debt consolidation.
The Department of Education said last year that previously, some loan payments were ineligible if they missed a penny or were a day or two late. The waiver means those payments will now be counted in the program.
Still, there is one major type of loan that doesn’t qualify for a waiver: the Parent PLUS loan. These are loans taken by the parents of students to pay for the education of their children. Only loans taken by students are eligible for exemption.
How many people have qualified for the exemption so far?
According to lawmakers citing government figures, around 190,000 public servants have had their student loans forgiven through the waiver.
Many more borrowers may qualify for the program, but they may not be aware of the discount.
How do I know if I am eligible?
The Department of Education has a website where you can learn about program requirements, which tend to be complex.
One important restriction is that you must work for a qualified employer, such as a public school or government agency, to be approved for the exemption. Only payments you made while working for an eligible employer will be counted.
For example, if you worked as a public school teacher for a year but then moved to a for-profit school, only payments made while working for a public school would count towards loan forgiveness.
What will happen after October 31?
Beginning November 1, 2022, the Department of Education will return to its regular program requirements for both the Public Service Loan Waiver and the Temporary Extended Public Service Loan Program.
The latter was created in 2018 to help those who were mistakenly enrolled in the wrong repayment plan and thus were not eligible for the Public Service Loan Waiver Program.
Can the exemption be increased?
The education department says the exemption will only be available until October 31, but a group of lawmakers is asking the administration for more time.
On Thursday, dozens of lawmakers asked US Education Secretary Miguel Cardona to extend the exemption until July 1, 2023.
In a letter to Cardona dated October 6, lawmakers including Democrat House Majority Leader Chuck Schumer of New York; And Senator Elizabeth Warren, a Democrat from Massachusetts, asked for more time, noting that the data “indicates that only a fraction of public servants eligible for PSLF have accessed the exemption.”