There is $ 700 million in student loan cancellations up for grabs on a first come, first served basis.
Here’s what you need to know and how to apply.
Student loan forgiveness
See if you can follow this story. The federal government offers a student loan exemption program. Student loan borrowers who believe they are eligible apply. 99% are rejected. Congress creates an expanded student loan exemption program. Student loan borrowers who believe they qualify for the Expanded Program apply. 99% are rejected.
A new government watchdog report, first obtained by NPR, says a confusing student loan waiver program and process resulted in 99% of the 54,184 completed student loan waiver requests being denied. From May 2018 to May 2019, Congress spent just $ 27 million of the $ 700 million on 661 requests for this new student loan forgiveness effort, according to the Government Accountability Office.
“The department has taken steps to help borrowers better understand the complex eligibility requirements, application process, benefits and other information related to the PSLF and TEPSLF programs,” said Angela Morabito, press officer of the US Department of Education. NPR. The ministry agrees with GAO’s recommendations on how to improve programs; a number of our efforts are already underway.
What happened and what can you do about it?
In May 2018, the US Department of Education announced details of the Temporary Expanded Public Service Loan Forgiveness Program. This program provides student loan forgiveness for borrowers who have previously chosen an ineligible repayment plan under the Public Service Loan forgiveness program. The Public service loan remission is a federal program that waives federal student loans for borrowers who are employed full-time (more than 30 hours per week) in a qualifying federal, state, or local public service job or 501 (c ) (3) which make 120 qualifying one-time payments over 10 years.
Here’s the important part that many of these applicants – including the 71% who were rejected for this reason – missed. To apply for this expanded student loan waiver program, you had to meet all the requirements of the public service loan waiver program, but you mistakenly signed up for an ineligible repayment plan (such as progressive or extended reimbursement). You with me?
How to Apply for a Temporary Waiver of an Extended Public Service Loan
Okay, so how do you avoid the fate of the 99% who were kicked out of this expanded student loan waiver program?
Here’s what you need to know to make sure you qualify:
1. You must be working for an eligible public service employer in an eligible public service role
Generally, there are two types of employers: a) state, local government and federal government; and b) 501 (c) (3) not-for-profit.
2. You must have direct federal student loans
The public service loan forgiveness program does not waive private student loans, even if you work in the public service. If you are not sure what type of student loan you have, check with your student loan officer or through Federal Student Aid. If you have FFEL loans, you must consolidate your student loans into a direct consolidation loan with the federal government to be eligible for the civil service loan forgiveness.
3. You must be enrolled in a federal repayment plan
You must also be enrolled in a federal income-oriented repayment plan and make the majority of your payments under the plan. You can determine which student loan repayment plan is best for you with these student loan calculator.
4. You must have applied for a civil service loan forgiveness.
This is critical. Do not skip this step. You must have applied for a civil service loan forgiveness and made some or all of your payments under a repayment plan that was not eligible. Then you were rejected just because you signed up for an ineligible student loan repayment plan.
How to apply for a temporary discount on an extended public service loan?
There are two easy steps:
- Email FedLoan Servicing at [email protected] to ask the Department of Education to reconsider your eligibility for the Public Service Loan rebate.
- Include the same name you submitted your Public Service Loan forgiveness application under and your date of birth in the email.
Example email template
Here’s an example of an email template you can use:
To: [email protected]
Subject: TEPSLF request
I ask the United States Department of Education to respectfully reconsider my eligibility for public service loan cancellation.
- Name: [Enter the same name under which you submitted your Public Service Loan Forgiveness application]
- Date of Birth: [Enter your date of birth in MM/DD/YYYY format]
Thanks for your consideration.
You will receive a response from FedLoan Servicing once your request has been reviewed. Separately, you can contact FedLoan Servicing at 1-855-265-4038 from 8 a.m. to 9 p.m. EST, Monday through Friday.
What if you didn’t work in the public service?
While you can try to get a student loan forgiveness as part of an income-based repayment plan, it can take 20-25 years to get forgiveness and your student loans can be paid off by then. There is a more proactive approach.
Refinancing a student loan can lower your interest rate, which can save you a lot of money in interest payments. With student loan refinancing, you can combine your existing private student loans, federal student loans, or both into a single new student loan with a lower interest rate and one monthly payment. This student loan refinance calculator shows you how much you can save.
You won’t have access to federal repayment plans and benefits, but many private student loan lenders now offer forbearance and deferral programs in case of economic hardship. The higher your student loan balance, the more you can potentially save.