Civil service loan relief ends this month unless Cardona extends it

New America, where the author works, has requested an extension of the PSLF waiver.

The cancellation of the public service loan (PSLF) exemption aims to make it easier for public service workers to qualify for student loan relief. Unless the Department of Education (ED) decides to extend the waiver, it will end on October 31st.

If you think you qualify for the PSLF, you must apply for it before the exemption expires. You could get credit for canceling payments made on your loans that didn’t qualify under the usual rules.

What is Civil Service Loan Forgiveness?

Congress designed the PSLF to forgive student loans for people who are employed in public service and who have made at least ten years of loan payments. People who work for the federal, state, local, or tribal government and most nonprofit employees are eligible for the PSLF, as are employees of other public entities, such as public colleges, schools, and the military. If you are unsure if your employer is eligible, you can check using ED’s Employer Verification Tool.

To be eligible for the PSLF, borrowers must make 120 payments on qualifying loans, usually under an income-based repayment (IDR) plan, while working for a qualifying employer. The program has faced significant implementation challenges and, until recently, very low approval rates.

How is the Civil Service Loan Forgiveness Waiver different from the regular process?

The PSLF derogation aimed to correct many shortcomings of the PSLF program and increase pardon approval rates. It allows payments made while the borrower was not enrolled in an IDR plan to count towards the 120 payments needed for forgiveness. This will also allow certain payment deferral periods to count towards the discount. The waiver also allows partial or late payments to count towards the 120 required for surrender.

Here is a breakdown of all the differences between the standard PSLF rules and the rules while the waiver is still in place.

When the waiver was rolled out, ED estimated that more than 550,000 borrowers would benefit from the PSLF waiver, either because they would qualify for full forgiveness or because more payments would qualify for forgiveness. So far, more than 211,000 borrowers have had their loans canceled due to the waiver. These figures make it likely that many borrowers would still benefit from applying for PSLF while the waiver is in place.

Could the exemption be extended?

Congressional Democrats have called on Education Secretary Miguel Cardona to extend the PSLF waiver until new regulations intended to improve the PSLF will take effect in July 2023. More than 100 members of Congress signed the letter sent to Secretary Cardona. The letter the signatories rightly suggested that ending the waiver less than a year before new and improved permanent rules for the PSLF come into force would be confusing for borrowers and limit the number of people who would benefit from the changes at the same time. where they are effective.

Democrats also introduced a bill, sponsored by Senators Whitehouse (D-RI) and Merkley (D-OR), which would make the current exemption permanent. However, without Republican votes, which likely won’t materialize, the bill has little chance of becoming law. In contrast, the Republicans have recently introduced a bill that would end the PSLF program entirelyarguing that the program is too expensive.

The bill was introduced by Reps. Foxx (RN.C), Stefanik (R-NY) and Banks (R-IN). The Republican plan would also create a single IDR plan in place of the current four, require all borrowers to make minimum payments of at least $25 per month on their loans regardless of income, and increase the discretionary income percentage. that borrowers must spend on loan repayments.

At this time, there is no indication that the PSLF waiver will be extended. This is of course still possible, but since ED has not indicated that it will extend the waiver, it is better for borrowers who may benefit from it to apply now rather than hoping that they will have more time.

Many changes are happening simultaneously in the student loan system. These changes should improve the system for students and borrowers. With all the changes, it can be difficult to figure out what you might qualify for and how to apply. So, if you may be eligible for the PSLF, take the time to apply now before the waiver flexibilities disappear.

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