Question: I am 73 years old. I took out student loans in 1999 and consolidated in 2004. I’ve only made one late payment in the 17 years I’ve paid off. I worked full-time at two public universities from graduation in 2001 to retirement in 2014. After applying for loan forgiveness, I was informed that payments made before 2007 do not count. The payments I made at retirement do not count. I have a balance of $12,000. This seems very unfair after 17 years of no missed payments and only one late payment. Do you have any advice?
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Responnse: “You can, apparently, do everything right — work in the civil service and make your payments — and still not get a pardon because of the bureaucracy inherent in the system,” says NerdWallet student loan expert Anna Helhoski. For those unfamiliar, the Public Service Loan Forgiveness Program (PSLF) forgives the remaining balance on direct loans after 120 eligible monthly payments have been made under an eligible repayment plan – but even the Ministry of Education itself notes that this program has had flaws: “The Public Service Loan Forgiveness Program (PSLF) is an important – but largely unfulfilled – promise to provide debt relief to support teachers, nurses, firefighters and others serving their communities through hard work that is essential to the success of our country,” he wrote.
However, “patches are currently in place to attempt to address some of the shortcomings of the program,” says Helhoski. Indeed, in October, the ministry announced a series of changes that could help borrowers. Here’s a recap: “We will be offering a time-limited waiver so student borrowers can count payments from any federal loan programs or repayment plans toward forgiveness.” This includes loan types and payment plans that were not previously eligible. We will pursue opportunities to automate PSLF eligibility, give borrowers a way to have errors corrected, and make it easier for service members to obtain forgiveness credit while they serve. Read more here.
Contact your federal loan officer and explain your situation again, advises Andrew Pentis, certified student loan counselor and education finance expert at Student Loan Hero. But note that unfortunately, your remaining balance may not be cleared. “This is because you can still only receive credit for payments made after 2007 and you still have to meet the 120 payment threshold. Another personal stumbling block is if you made payments during your retirement and that you’re not working full-time. Those payments would still not count toward the 120-payment requirement for PSLF,” Pentis says.
Usually, to get your debt paid off through civil service loan forgiveness, you have to make payments every month over a period of about 10 years, while working full-time for a civil service employer. eligible public, such as the government or a public university. . “There are a ton of caveats in this process that can lead to ineligibility. You must have a direct loan, for example, which means that you usually have to consolidate multiple loans into one loan and any payments made before consolidation are not eligible for PSLF. You must also enroll in income-based reimbursement, which will reset your payment schedule, meaning any payments made before enrollment are not eligible for PSLF,” says Helhoski. Note that some of the qualified repayment plan rules have been temporarily suspended, as the government explains here: “Now, for a limited period, borrowers can receive credit for past repayment periods that otherwise would not be eligible for the PSLF”. See the details here.
The so-called expanded temporary pardon for public service loans was passed as part of a March 2018 federal spending plan and included a $350 million pot for borrowers who otherwise qualified for the PSLF, but who were mistakenly entered into the wrong repayment plan. And as discussed above, recently a temporary to renouncer has been put in place to facilitate the counting of previously ineligible payments. “This means borrowers can have their loan repayments counted for the PSLF even if they were made on the wrong type of loan, were previously consolidated, were made in the wrong repayment plan , were made late or were on hiatus while a borrower was on active duty in the military,” Helhoski says. In this case, it would make sense to call the issuer and see if you are able to qualify.
Additionally, Helhoski says borrowers can consolidate their student loans through the federal student aid site and submit the PSLF form. If all of your $12,000 payments have not been consolidated, you can combine multiple federal loans into one loan and although this may lower your payments, your interest amount will increase. “But it’s only available for a limited time – until the end of October 2022,” says Helhoski.
Don Grant, Certified Financial Planner at Fortis Advisors, recommends preparing an email to Federal Loan Servicing asking the Department of Education to reconsider your eligibility for the public service loan forgiveness. “Include the same name under which you submitted the PSLF application and date of birth in the email and send it to [email protected],” says Grant.
Although the PSLF program has encountered many problems, Grant says, “I strongly encourage them to reapply and stick with it. It has been reported that many qualified borrowers have been turned down, but changes and improvements have been made in a bid to wipe out more applicants and alleviate the debt.
*Questions have been edited for brevity and clarity.