Once-disastrous civil service loan forgiveness program undergoing an overhaul: Tara Britton

Guest Columnist Tara Britton is Director of Public Policy and Advocacy for the Center for Community Solutions.

Many of us in the public and nonprofit sector shudder when we hear the words “Public Service Loan Pardon”.

The Public Service Loan Discount, or PSLF for short, was enacted in 2007 to offer a federal student loan discount to anyone who has made 10 years of payments (120 in total) while working in the public sector or for purpose. non-profit.

It seemed like a pretty simple idea. But when the first people eligible for the pardon began applying to the U.S. Department of Education in 2017, it was a programmatic disaster.

Less than 5% of applicants were approved for loan forgiveness, despite tracking payments and being an employer for a decade.

A myriad of reasons were identified as contributing to the mess: poor communication through the PSLF loan service, uncertain status of employers, missed payments or borrowers paying under a repayment plan that was not eligible at the PSLF – despite many being told they were on the right track.

During the 2020 presidential campaign, current President Joe Biden pledged to resolve issues with the PSLF and honor the pledge to officials who had relied on the PSLF after 10 years of payments.

Federal student loan payments and accrued interest have been suspended since March 2020 due to laws passed to alleviate the COVID-19 pandemic and executive action by former President Trump and President Biden.

The Education Department has taken this time to address some of the major problems with the PSLF and, under a plan announced in October – PSLF Limited – many of the issues plaguing the program will be addressed.

Many details are still being reviewed, but some people are already on loan forgiveness, including some who had been turned down in the past.

All this to say that things are finally moving in the right direction. There is one keyword to pay attention to – limit. While more permanent fixes for PSLF are in the works, this plan is temporary and expires on October 31, 2022.

This is where employers can step in.

With all the conversation around workforce challenges, employers in the nonprofit and public sectors should know about the PSLF, guiding their employees through the process of tracking payments (made while working for employers). eligible), help them assess whether they have made any payments that can be counted during previous employment and offer these services as an employment incentive.

The State of Ohio, as part of its workforce initiatives, should support employers in this effort by dedicating COVID relief funds to a guide or liaison who can provide a PSLF support for employers.

The limited PSLF plan can help someone who worked in the public service count more forgiveness payments than they were previously entitled to, so employers can help spread the word among their current employees as well.

And while working and paying for 10 years is a long road, some people have made payments that are newly eligible for PSLF and could advance them in their payment statement.

Student loans, on the whole, are mired in confusing language that sends you searching all over the internet for answers. Add PSLF on top of that, and you could just throw in the towel and pay into the plan you’re automatically signed up for.

Employers, non-profit organizations and eligible public bodies should become PSLF experts to provide support to their employees. And thanks to the fall expiration date, time is running out.

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