Articles Posted in Student loans

We are seeing forgiveness every week, more likely every day, now, but many are still waiting…

Interestingly, the huge spending bill being discussed by Congress right now does not include anything additional to Federal Student Aid.

What does this mean?  Well, the FSA has to modernize its National Student Loan Database System to make it far more transparent than it currently is, provide a viewable tracking IDR payment mechanism, switch all servicer websites to its own government website, restart payments in August-ish, introduce a new IDR program in July, process the PSLF Waiver, implement and process the IDR Waiver, create and process a Joint Spousal Consolidation application to separate the  loans, possibly cancel 10k or 20k pending the result of the Supreme Court, plus grant the discharges for all Borrower Defense to Repayment applications along with refunds for any monies paid to ED for over 100 schools approved by the Sweet v. Cardano class settlement.  Wow.

As a student loan advocate for many years, and a practicing attorney in Tampa Bay, I fear that many people may interpret this advice in a way that will hurt their chances for forgiveness.  The PSLF application is only one-half of the equation.  A very important part is to make sure that you consolidate your federal loans before 10/31 to get this relief.  A consolidation will allow the required ten years to run from the date of the first loan, as well as make sure that older loans and Perkins loans are included for PSFL forgiveness.

If you simply send in the PSFL application by itself, by the time you realize you have the wrong loan type, it will be too late to correct this.  Also, you won’t have the benefit of the ten years running from the date of first loan, which could add years of unnecessary payments.

A key requirement to take advantage of the new PSLF Waiver is to make sure you have Direct federal loans.  Prior to 2010, an estimated 80% of federal loans were under a different and now out-dated program called Federal Family Education Loans (“FFEL”).  An easy way to check, is to go onto studentaid.gov and view details of your loans.  You have until October 31, to consolidate any of these older FFEL loans, or even Perkins loans, to a newer Direct loan.  Only Direct loans are eligible for the PSLF Waiver which is intended to ensure that past payments actually count toward forgiveness, as well as the IDR Waiver which allows past lengthy forbearances also to count.  Even the recent $10,000 – $20,000 forgiveness will only apply to those loans held by the government.  While some FFEL loans are held by the government, most remain with private firms and are excluded from all of this.