Here are 6 major changes to student loan forgiveness.
Here’s what you need to know.
Student Loans
Through October 31, 2022, you have a golden opportunity to qualify for student loan forgiveness like never before. If you’re pursuing public service loan forgiveness, you should take advantage of a limited waiver for student loan forgiveness. President Joe Biden and the U.S. Department of Education have changed the requirements for public service loan forgiveness so that more student loan borrowers qualify more quickly.
Here are the 6 major changes and how you can benefit:
Student Loan Forgiveness: the current rules
If you’re pursuing public service loan forgiveness, you can get total forgiveness of your federal student loans. To qualify, you’ll have to meet certain requirements, such as making 120 monthly student loan payments while enrolled in an income-driven repayment plan. You’ll also need to work for a qualified public service or non-profit employer. (Is student debt cancellation next?) According to the U.S. Department of Education, under the current rules for student loan forgiveness:
- Direct Loans: Only Direct Loans are eligible;
- Student Loan Repayment: you can only make student loan payments under the Standard Plan or an income-driven repayment plan;
- On-Time: you must make on-time student loan payments;
- Full-Time: you must be employed full-time (at least 30 hours per week) for a qualifying employer; and
- Employment: you must work for a qualifying employer at the time of both the application and student loan forgiveness.
(Related: Student loan cancellation reduced to $25,000 for student loan borrowers with new proposal)
Student loan forgiveness: the new rules
Until October 31, 2022, you can apply for a limited waiver for student loan forgiveness. This limited waiver is a “catch all” waiver, which allows you to “count” any previous student loan payments that weren’t eligible under the current rules. Effectively, the Education Department will count ineligible student loan payments for a limited period of time that can get your student loan forgiveness faster. Under the new rules, you can:
- FFEL and Perkins Loans: Get “credit” for for student loan forgiveness whether you made repayment on a Direct, FFEL or Perkins Loan;
- Student loan repayment plans: count student loan payments made under any student loan repayment plan;
- Student loan consolidation: count student loan payments made prior to student loan consolidation, even if you were on the wrong repayment plan;
- Late payments: count student loan payments that were late or were partial student loan payments;
- Student loan consolidation and late payments: count student loan payments that were made before consolidating your student loans, even if your student loan payments were late or were for less than the amount due; and
- Employment: get student loan forgiveness even if not you’re employed or not employed by a qualifying employer at the time of application and forgiveness.
(Related: Here’s who won’t get student loan forgiveness).
Student loans: next steps
You can apply for a limited waiver for student loan forgiveness through the Education Department. Biden has cancelled $4.5 billion of student loans for public servants, and $15.5 billion of student loans total. Since the program is currently active, you can still pursue public service loan forgiveness. If you’re already enrolled, make sure to complete the limited waiver so you can count more student loan payments and get student loan forgiveness sooner.
(Student loan refinancing drops to ridiculously low rates)
The end of temporary student loan relief is scheduled soon. This means that federal student loan repayment will start imminently. Make sure you have a game plan for student loan repayment. Here are some popular options to consider as you pay off student loans:
- Student loan refinancing (lower interest rate + lower monthly payment)
- Income-driven repayment plans (lower monthly payment)
- Public service loan forgiveness (student loan forgiveness for federal loans)
Student Loans: Related Reading
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Here Are 6 Major Changes To Student Loan Forgiveness - Forbes
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