Student Loan Forgiveness: This major program only has weeks to apply

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Teachers, government workers and people employed in nonprofit organizations have just days left to apply for a one-time waiver that could help them erase or reduce their student debt.

The so-called “limited public service loan exemption” was proposed by the Biden administration last year to fix a major problem with a long-standing program meant to relieve state employee college debt. Under remissionpublic sector workers can apply for a loan for past repayments that previously did not qualify for loan relief.

The deadline to apply for a waiver is Oct. 31 — meaning public workers have only about three weeks left to secure relief.

President Biden trying to help student loansthat will wipe away up to $20,000 in student debt for qualified borrowers, has received considerable attention, but less attention has been paid to the administration’s efforts to help state employees with their college debt.

The Public Service Loan Forgiveness Program was established in 2007 with a noble goal: To forgive the student debt of Americans who have worked in public service — as teachers, civil servants or in nonprofit organizations — for at least 10 years. But the program became notorious for its byzantine regulations, as well as misleading guidelines from some loan companies that prevented many state employees from getting relief.


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For example, 2018 message of the Government Accountability Office, a government watchdog, found that while 1 million people applied for the program, only 55 people actually received debt relief during that time.

One reason for the dismal results: People who consolidated their student loans learned that their payments didn’t count toward the program, so they were out of luck.

What does an exception do?

The waiver will be reversed some of the limitations about what types of loans and payments qualify for the program.

The Department of Education says that “any prior repayment period will count as a qualifying payment, regardless of the loan program, repayment plan, or whether you made your payment in full or on time.”

For example, people who have consolidated their loans will now be able to count their payments into the program. The Biden administration estimates it will help 550,000 workers who previously did not qualify for loan consolidation.

Previously, some loan payments were disqualified if they were just a penny short or were paid a day or two late, the Department of Education he said last year. Waiver means that these payments will now count towards the program.

Still, there’s one main type of loan that doesn’t qualify for a waiver: Parent PLUS loans. These are loans that parents of students take to pay for their children’s education. Only student loans are exempt.

How many people have qualified for the exemption so far?

The waiver saw nearly 190,000 state employees have their student loans forgiven, according to lawmakers, citing government data.

Many more borrowers could qualify for the program but may not be aware of the waiver.

How do I know if I qualify?

The Department of Education has a website where you can learn about the program requirementswhich remain complicated.

One important limitation is that you will need to work for an eligible employer, such as a public school or government agency, to obtain approval for the exemption. Only payments made while you worked for a qualified employer count.

For example, if you worked as a public school teacher for one year but then transferred to a for-profit school, only the payments you made while working for the public school count toward loan forgiveness.

What happens after October 31st?

From November 1, 2022, the Department of Education will return to its normal program requirements for both Public service loan forgiveness and Temporary Extended Credit Program for Public Utilities.

It was created in 2018 to help people who were mistakenly placed on the wrong repayment plan and thus did not qualify for Public Service Loan Forgiveness.

Would it be possible to extend the exemption?

The Education Department says the waiver will only be available until Oct. 31, but a group of lawmakers is asking the administration for more time.

On Thursday, dozens of lawmakers asked U.S. Education Secretary Miguel Cardona to extend the waiver until July 1, 2023.

On October 6 letter Cardon, lawmakers, including House Majority Leader Chuck Schumer, Democrat of New York; and Sen. Elizabeth Warren, D-Massachusetts, asked for more time, noting that the data “suggests that only a fraction of state employees who are eligible for PSLF have taken advantage of the waiver.”

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