As the Trump administration makes significant changes to the student loan system, many borrowers in the Public Service Loan Forgiveness (PSLF) program are expressing concerns about the future of their loan forgiveness.
The PSLF program, established in 2007 under President George W. Bush, allows employees working for government or non-profit organizations to have their federal student loans forgiven after making 10 years of qualifying payments.
However, recent changes in the administration’s handling of the loan system are causing anxiety among borrowers.
Mark Kantrowitz, a higher education expert, noted that there was widespread panic among PSLF borrowers due to the ongoing uncertainty, the CNBC reported.
Despite the challenges, taking the required steps can help borrowers stay on track toward achieving loan forgiveness under PSLF.
Changes to income-driven repayment plans
Currently, the U.S. Department of Education has removed applications for income-driven repayment (IDR) plans from its website. These plans are important for PSLF applicants because they cap borrowers’ monthly payments based on their income.
This disruption stemmed from a recent court ruling by the 8th Circuit Court of Appeals, which blocked the Biden administration’s new IDR plan, known as the “SAVE” plan. Despite this, the ruling does not affect the PSLF program’s rules directly.
“This was a purposeful decision by the Trump Administration to harm borrowers and in no way needed to be done,” Natalia Abrams, president and founder of the Student Debt Crisis Center, said recently. “Shutting down access to income-driven repayment plans was not the decision of the 8th Circuit—it was a malicious move by the Administration that will create serious hardship for millions of working families.”
For borrowers in the PSLF program, being enrolled in an IDR plan is crucial, as it is one of the ways to qualify for loan forgiveness. With IDR applications temporarily unavailable, borrowers may face challenges in continuing their progress toward forgiveness.
Impact on borrowers’ progress toward forgiveness
Apart from pausing payments on federal student loans, the Biden administration also halted interest accumulation. However, borrowers in the PSLF program were not given credit toward their 120 required payments during this time.
For those enrolled in the SAVE plan, which was now on hold, this pause was particularly frustrating. If borrowers were on an IDR plan other than SAVE, they would still receive credit for payments made during this period, as long as they are working in eligible jobs.
The Education Department is working on fixing the application process to align with the court’s decision, but it may take months before these changes are fully implemented.
Many borrowers are facing significant delays, as the Department works to process the backlog of IDR applications. The pause in IDR processing could last for up to 90 days, or even longer, according to reports. It could lead to further delays in receiving affordable payment plans and forgiveness under federal law, Forbes reported.
Alternative plan: The “buyback” opportunity
For borrowers who are already years into the PSLF program, there is a potential option to make up for lost time. The “buyback” opportunity allows borrowers to pay for months spent in forbearance or deferment, which would count toward their 120 qualifying payments.
It could be especially helpful for borrowers, who have been in the program for 10 years or longer. Kantrowitz advises borrowers to request the “buyback” option soon, as this benefit might be eliminated under the current administration.
Keep track of your progress
With the ongoing changes to the system, borrowers pursuing PSLF should keep detailed records of their payment history and employment.
There have been past issues with inaccurate payment counts, and experts warn that the current transition could lead to more errors.
Kantrowitz suggests printing a copy of your payment history from StudentAid.gov and creating a spreadsheet to track qualifying payments. Borrowers should also use the PSLF help tool on the Department of Education’s website to keep up with employer certifications and submit them annually.
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