On October 6, the Department of Education announced changes to the Public Service Loan Forgiveness Program (PSLF) that will now make new loans eligible for forgiveness that were previously ineligible, while also addressing the program history of a rejection rate of 99% for those who apply. for a loan discount.
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The Ministry said the policy will ensure that 22,000 borrowers with consolidated loans – including previously ineligible loans – will immediately be eligible for a $ 1.74 billion rebate without any further action on their part. is necessary. Another 27,000 borrowers could also claim an additional $ 2.82 billion in rebate if they can verify certain periods of employment.
Overall, the ministry estimates that more than half a million borrowers who previously consolidated their loans will now see an increase in eligible payments. They added that the average borrower could benefit from two more years of progress towards forgiveness.
The changes announced will include:
A limited PSLF waiver that allows all student loan payments to count towards the PSLF, regardless of loan program or payment plan
The ministry added that its waiver will allow student borrowers to account for all payments made on FFEL or Perkins loan program loans, also waiving restrictions on the type of repayment plan and the requirement that payments be made. completed in full and on time. for all borrowers. Borrowers will need to submit a PSLF form before October 31, 2022 in order to benefit from these benefits.
Automatically provide credit to the PSLF for military service members and federal employees using federal data matches
Next year, the Department plans to perform data matches to extend credit to borrowers to the PSLF without demand.
Review refused PSLF claims for errors and give borrowers the opportunity to have their PSLF determinations reconsidered
These tactics will help identify and correct any or more service errors that are preventing borrowers from getting the PSLF credit they are entitled to.
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The cancellation of student loans has been a point of contention this year, as the Biden administration approved more than $ 9.5 billion in student loan relief, mostly for borrowers with total and permanent disabilities. This has led lawmakers to do more and extend aid to a wider range of the population. However, Biden pushed back, saying Congress will have to deal with the legislation, saying, “I don’t think I have the power.”
As mentioned earlier, the Department of Education is known to only approve about 1% of pardon requests. “[PSLF] is going to be one of the main strategies we adopt, especially when educators who have served for years are routinely turned away, ”Education Secretary Miguel Cardona recently told CNBC. “We need to revamp this system and make it more user-friendly. We need to keep the borrower at the center, especially for people who choose the public service. “
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In the ministry statement, Cardona added, “Teachers, nurses, first responders, the military and so many public service workers are supporting us, especially amid the challenges of the pandemic. Today, the Biden administration shows that we support them too. “
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Last updated: October 15, 2021
This article originally appeared on GOBankingRates.com: Student Loan Forgiveness: Education Department’s ‘Transformational’ Changes Improve Rejection Rate by 99%