New Law Could Wipe Over 550,000 People's Student Loans. Do You Qualify?
- Author: Jeffrey Simmons
- Posted: 2023-02-27
If you are one of the 13% of US Citizens with student loan debt, you probably spend a lot of time each month paying back loans. However, new changes might mean your budget no longer has to include loan payments. The US Department of Education is currently running a program that promises to forgive or reduce student loan payments. Thanks to some recent changes in the program's eligibility requirements, more people than ever can clear their student loans. However, time to enroll in this program is limited, so you need to look into it as soon as possible.
US Department of Education Announces Change to Student Loan Program
In 2007, the Department of Education created the Public Service Loan Forgiveness (PSLF) program. This program aimed to help workers who were in public service jobs, such as teachers, social workers, first responders, government workers, or nonprofit-employed doctors and lawyers. According to the initial rules, borrowers who made 120 monthly payments could have the rest of their debt wiped away.
However, the program initially only applied to a select few. People had to have gotten a Direct Loan and enrolled in income-driven repayment plans. This meant that roughly 80 percent of student loan borrowers didn't qualify for the loan forgiveness program. This all changed after a complete overhaul to the forgiveness system.
First of all, the Department of Education announced that more people would be eligible for the program. For these new members of the program, the government will also offer PSLF waiver that would let previous payments count towards the program. Finally, they will broaden the admissions requirements and make the application process easier. All of these changes are meant to make the loan forgiveness program simpler to understand and easier to access.
Are You Eligible for Student Loan Forgiveness?
Everyone who was previously eligible for loan forgiveness through the program can still apply. However, there are some other additions. Anyone with a federal student loan can apply, regardless of what sort of payment plan they were previously enrolled in. For example, people with a Federal Family Education Loan can now join the program. Furthermore, those who had loan repayment suspended while they were in the military can also apply.
The main requirement you need to meet is just working full time for a qualifying employer. There's a broad range of employer types who meet the PSLF guidelines. Anyone employed by any part of the federal, state, local, or tribal government qualifies. The program also allows forgiveness for people working at any not-for-profit organization.
Why New PSLF Members Should Look Into Waivers
The really great thing about these changes is that they apply retroactively. If you previously didn't qualify for the loan program but now do, you don't have to start making your 120 payments from scratch. Instead, you can sign up for the waiver, and then previous payments you made will count. This means that if you are a newly qualified applicant and have made 120 payments in the past, you could go ahead and clear your debt now.
However, keep in mind that you only have a limited amount of time to enroll. Applicants need to submit a PSLF form by October 31, 2022. If your personal finances are tight right now, it is a good idea to apply for the waiver as soon as you can. The Department of Education warns that there might be some delays in processing because they expect so many new applicants. Therefore, it could take a few months for your student account loans to be adjusted.
These Changes Could Cause Massive Changes to How Student Loan Is Handled
These changes will have very broad and far reaching applications. Experts estimate that there are 22,000 people not currently in the program who could have all their debt immediately cleared by signing up. Furthermore, there are over 550,000 new people who can join the program. This will let hundreds of thousands of people wipe their debt a little sooner than expected.
Currently, the national student loan debt is at roughly $1.7 trillion. Such a significant debt forgiveness program can have a major impact on the economy. People who sign up for this program can free up funds to meet other financial goals, such as buying a house, paying for a child's college, or getting further education. Ultimately, this new program could be lifechanging for thousands of people.
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