Back in June, PACG provided an update on the changes coming towards the teacher financial aid programs! Turns out, there may be more to just that, but let’s jump right in.
With the plans recently announced, the Biden administration planned its overhaul of the student loan forgiveness program. This was a long time coming!
The changes could offer debt relief to many teachers, social workers, military members, and other public servants. The department is planning on temporarily dropping some of the toughest requirements around the program with hopes of having more college students to develop interest in public service.
22,000 workers were immediately eligible for loan cancellation upon the announcement, with an estimated 1.7 billion.
The Public Service Loan Forgiveness program, created by congress in 2007 was to encourage more college graduates to pursue careers in public service. The plan promised that if employees of government or non-for-profit groups were to make 10 years of monthly payments on their federal student loans, the remainder would be canceled.
This plan has raised tons of uncertainty for employees who may have thought that they would be eligible, and in 2017 it became evident that clarification was needed.
As of 2022, federal workers and military members will no longer need to get their employment certified to prove they worked in public service while making their payments.
Out of the 43 million borrowers, only 5,500 have had their loans cleared through this quite confusing program.
With recent changes, and some clarity, payments that borrowers were informed were ineligible, may now be counted towards the 120 payments required. Borrowers may obtain credit for those payments if they apply for a loan forgiveness program by October 31, 2022, as long as the borrower was working in an eligible job during the time payments were made.
Borrowers with FFEL loans (those issued by banks), must get their debt consolidated into new loans under the existing federal loan system. Borrowers have until October 2022 to do this, so HURRY!
Parent Plus loans are currently still ineligible for this program – what a bummer.
Click here to read more on this topic.
