100,000 student loan borrowers have had their debt forgiven under this policy fix

Miguel Cardona, U.S. Education Secretary, at the Queen Theatre on Dec. 23, 2020 in Wilmington, Delaware.
Joshua Roberts | Getty Images News | Getty Images

More than 100,000 borrowers will receive student debt forgiveness thanks to policy fixes made to the public service loan forgiveness program.

The relief amounts to more than $6 billion, according to new data released by the U.S. Department of Education.

Signed into law by then-President George W. Bush in 2007, the forgiveness program allows non-profit and government employees to have their federal student loans canceled after 10 years, or 120 payments. The Consumer Financial Protection Bureau estimates that one-quarter of American workers could be eligible.

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However, the program has been plagued by problems, making people who actually get the relief a rarity.

Borrowers often believe they’re paying their way to loan cancellation only to discover at some point in the process that they don’t qualify, usually for technical and confusing reasons. Lenders have been blamed for misleading borrowers and botching their timelines.

More borrowers are now seeing their loans cleared after reforms to the program announced last year by the Biden administration.

Some of those changes including reassessing borrowers’ timelines and counting some payments that were previously ineligible. (For example, the type of loan a borrower held or the repayment plan they were enrolled in often disqualified them, without their knowing.)

How can I benefit from the new rules?

To begin, you want to act quickly, said Mark Kantrowitz, a higher education expert.

That’s because the Biden administration’s new rules for public service loan forgiveness are slated to expire on Oct. 31.

If you have either a Federal Family Education Loan (FFEL) or a Federal Perkins Loan, which don’t normally count for public service loan forgiveness but now temporarily do, you’ll need to consolidate those into direct loans with your servicer.

“It typically takes 30 days to 45 days for the consolidation to occur,” Kantrowitz said.

“Borrowers should do this even if they don’t expect to have 120 payments by the deadline, as the previously ineligible payments will count only if they do this,” he added.

In addition, borrowers will also have to prove that their work was considered public service for any stretch of time that they’re trying to get counted toward forgiveness. To do so, you’ll want to file with your servicer a so-called employer certification form for each job you’ve had throughout your timeline.

Borrowers currently jobless or not working in public service may still qualify for forgiveness now, so long as they’ve made 120 qualifying payments in the past, Kantrowitz added.

Also, keep in mind that months during the government’s payment pause and interest waiver on federal student loans, which has been effect since March 2020, count toward the program, even if you haven’t been paying.

Some borrowers seem to be getting forgiveness automatically after the government’s auditing of these accounts. Still, taking these steps will make sure you benefit.

Sophie Tremblay

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