First Come, First Served
If you thought you were out of luck to qualify for the Public Service Loan Forgiveness (PSLF) program because you were enrolled in graduated or extended repayment plans — Congress recently did you a favor.
Forbes.com reports that as part of the new federal spending bill, $350 million has been authorized to the Department of Education to offer forgiveness to all student loan borrowers who have a loan from the Direct program, have made all payments in full and on time, and have worked 10 years in a public service job for a qualifying employer.
The only catch? The funds will be given out on a first-come, first-served basis until the money runs out — which could be pretty quickly given the many newly eligible recipients. The application process will begin in about 60 days, at the end of May.
The PSLF was established in 2007 to allow student loan borrowers who pursue government or non-profit public service jobs to wipe out their remaining debt after 10 years of on-time payments. Of the eight repayment plans available to borrowers, only four of them were generally eligible for PSLF, and many debtors picked a non-qualifying plan — sometimes receiving bad advice from a loan servicer.
After years of timely payments, these debtors learned their prior payments would not qualify, and there was no way to go back and retroactively fix the error. In one of the most prominent cases, a teacher in Eugene, Oregon found out after paying back $70,000 to the government under the wrong repayment plan, he would have to switch plans and start over if he wanted to get his loans forgiven.
You can read more about the Public Service Loan Forgiveness program on our website.
Are you interested in learning how this amendment could affect your student loan status? Call (619) 678-1134 to schedule your free initial consultation with Chris Bush today.