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The pandemic-era policy suspending federal student loan payments was a particularly big win for officials.
Most borrowers benefited from the payment break, which lasted more than three years and spanned two presidencies. But for those pursuing the popular civil service loan forgiveness program, the policy has allowed them to get closer to debt cancellation without making any payments on their debt.
“We can safely say that PSLF borrowers have saved thousands of dollars,” said higher education expert Mark Kantrowitz.
The PSLF program was signed into law by then-President George W. Bush in 2007 and allows eligible nonprofit and government employees to have their federal student loans forgiven after 10 years or 120 payments. The Consumer Financial Protection Bureau estimates that a quarter of American workers could be eligible.
Here’s what the payment pause meant for those seeking relief.
The months of break count for the cancellation of the loan
Each month during the break must be taken into account in the borrowers’ calendar on PSLF, whether or not they have made a payment. For this reason, experts have recommended that officials avoid repaying their debt during this period.
The pause on federal student loan bills has been extended eight times since it was first announced in March 2020 and has been in effect for more than 36 months now, meaning nearly a third of the payments required by borrowers to get the PSLF may be covered by the relief. policy.
Supporters say the officials deserved such a benefit after the problems that plagued the loan forgiveness program. Borrowers often felt like they were paying for loan cancellation only to find out at some point in the process that they are ineligible, usually for confusing and technical reasons. Advocates and regulators have also blame lenders for deceitful borrowers and pushing their deadlines.
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Kantrowitz said borrowers can visit StudentAid.gov to check how many eligible payments they’ve accrued.
The Biden administration is also working to make adjustments to people’s accounts, to ensure their payments have been properly accounted for, Kantrowitz said.
Many PSLF requirements still in place
Although borrowers pursuing the PSLF get credit for payments during the break, they must still be employed by the government or an eligible nonprofit to proceed to loan forgiveness, Kantrowitz said.
“The Biden administration has not waived the requirement that the borrower must be employed full-time in a public service job for a suspended payment to be considered for the PSLF,” it said. -he declares.
The best way to find out if your job is in the public service is to complete the employer certification form. Try to do this paperwork at least once a year, Kantrowitz said, and keep records of your confirmed eligible payments to avoid mistakes or missed credit.
Borrowers must also ensure that their loans are part of the direct lending program and that they are enrolled in an income-driven repayment plan, which are further mandates of the policy. Those with other types of federal loans have until the end of 2023 to regroup in the direct loan program to receive credit for qualifying payments, an Education Department spokesperson said.
When the payment pause on federal student loans ends, likely in September, borrowers will need to resume payments to get credit for the PSLF.
Quick forgiveness will have less impact
The fate of the Biden administration’s sweeping student loan cancellation is currently in the hands of the Supreme Court.
If judges allow the program to continue, the impact on borrowers pursuing PSLF may not be too great, experts say. For some, the $10,000 or $20,000 relief would pay off their debt and they would no longer have to make monthly payments.
Yet, if they still have a balance left, their monthly bill likely won’t change after relief, since their payment is usually calculated based on their income rather than total debt.