Congress shocked many people who expected a hand of support from the government about Student Loans. This wish came true when Congress allocated $350 million for the Department of Education. The aim was to support borrowers get student loan forgiveness under the Public Service Loan Forgiveness Program (PSLF). This fund was allocated to help fix the Public Service Loan Forgiveness Program. It is one of the most popular, at the same time troubled student loan forgiveness programs earlier this year.

However, under several student loan forgiveness programs, borrowers could have their student loans effectively paid by the federal government. That doesn’t entirely meet the policies of the Trump administration. U.S. Secretary of Education Betsy DeVos has frequently stated her goal to facilitate the interests of student loan borrowers. Therefore, President D.Trump and Education Secretary B.DeVos wanted to do away with the issues encompassing the Public Service Loan Forgiveness Program and Income-Driven Repayment programs.

 

In March, Congress allocated $350 million for borrowers who were in a qualified public service job and meet all the requirements. Except that they were prevented from PSLF loan forgiveness because were registered in graduated or extended repayment plans, which did not fit the criteria.

 

BACKGROUND ON THE PUBLIC SERVICE LOAN FORGIVENESS PROGRAM

 

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The purpose of PSLF, established in 2007, was to attract graduates to become qualified in public service and nonprofit fields that served the community. Also, to enable forgiveness of all student loan debt for those borrowers over ten years and after 120 payments into an income-driven repayment plan. To be eligible for forgiveness under PSLF, you must be on an income-driven repayment plan.

However, the majority of the student loan borrowers have complained that the Public Service Loan Forgiveness program is incredibly complicated to pass. Some say, after years of making payments they found out that their payment program made them ineligible for the PSLF program. The Congress allocates $350 million to those who meet all requirements but were paying into the wrong repayment plan, either a graduated or extended repayment plan.

WHAT ARE THE REQUIREMENTS?

The forgiveness program will work out as on a “first come, first served” basis until the funds run out. The new changes considering PSLF eligibility do not impact other requirements. To be one of those who benefits from the Public Service Loan Forgiveness program, federal student loan borrowers must work full-time and more than 30 hours per week in a qualified federal, state or local public service field. It can also be a 501(c)(3)charity or non-profit field.

You should also make 120 eligible on-time payments over ten years. Working as a full-time volunteer for Americorps or Peace Corps is also acceptable. Even if you are in public service, the PSLF program does not forgive private student loans.

If you work in the private sector or a not-for-profit organization in a non-public service role, this alone will not make you eligible. Also, you must have Direct, federal student loans to qualify.

One crucial part here is your repayment plan which means you must be enrolled in an income-based federal repayment program and make 120 monthly and on-time payments over ten years to qualify.

 

Additional qualifying repayment plans include: 

Extended Repayment Plan;

Graduated Repayment Plan;

Consolidation Graduated Repayment;

Plan Consolidation Standard Repayment Plan.

 

The Education Department will reconsider your application with a list of qualifying repayment plans. They will consider it even if these repayment plans do not come usually under Public Service Loan Forgiveness.

You also can consolidate your federal student loan. Consolidation Loans are available for those who would like to consolidate loans into a Direct Consolidation Loan and this way to qualify for Public Service Loan Forgiveness.

There is another term for being eligible for the Public Service Loan Forgiveness program. You must have applied for the PSLF program and have been denied, only because you haven`t done some or all of payments under a requiring repayment plan.

 

IS THIS PROGRAM USEFUL?

 

loan-dischargeIn order to make sure that you are on track and pay into a qualified repayment plan and have an eligible employer institution, you should present an Employment Certification form. You should present it on an annual basis and also if you change jobs. Of course, that form was not available until 2012. So, for five years, there was quite a lot of guesswork.

People who signed up in the initial years are just now approaching the 10-year point when they may be qualified for forgiveness. Some will find they are not eligible, because they didn’t have the right kind of repayment plan. This may result in many people applying for their piece of the $350 million relief. In other words, if you have been waiting too long to use, you may miss out even if you are otherwise qualified for the aid. There is only a little money in the pot, and it’s not enough to cover all the students with debt.

Already, more than 700,000 borrowers have completed an employment form for the PSLF program. However, many don’t meet the qualifications.

Approximately, 34,000 people have applied for loan forgiveness program through the fix-it fund, according to data shared by the Department of Education. They approved just 26 borrowers. More than 20,000 applications are still pending. Because, the borrower hasn’t yet received a rejection for public service loan forgiveness, a requirement that has been criticized by consumer advocates as an additional obstacle.

However, nearly 20% of the workforce are in jobs that would currently be qualified for the PSLF program. The Government Accountability Office (GAO) estimates that under the current plan, the government is going to erase $108 Billion in loans through this program.  Under the new budget, the potential impact of this change is not clear as to what will happen to the 550,000 student borrowers currently in the PSLF program.

 

Problems around Public Service Loan Forgiveness are the fourth most common. Here are the top ten issues about forgiveness programs.

SHORTCOMINGS OF THE PROGRAM

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There some shortcomings of this program. First of all, the loan forgiveness will be offered on a first-come, first-served basis until the fund runs out.

However, the biggest problem is that $350 million is not at all likely to cover the demand. To give some broad view, to fix the program Senate Democrats tried to get $4 billion so that this gave you some idea of the shortcomings of the $350 million allocations. Therefore, they will distribute the funds on a first-come, first served basis.

The new legislation only solves problems around repayment plans. If you have the kind of loan that does not qualify, there is no cure.

This program is a one-time only project of the federal Public Service Loan Forgiveness program. If you are not able to get it, you have probably missed it for good. If you have not been making high monthly payments, you will not be eligible. Congress will compare your recent monthly payment now and from one year before to what you would have paid under a usually qualified payment plan. If those payments are lower than payments under the normally eligible plan, you are out of luck and will get no forgiveness.