The student loan industry is going through a series of changes, and government officials are an important part of it.
Federal student loan borrowers enrolled in the Public Service Loan Forgiveness (PSLF) program, which forgives student debt for nonprofit and government employees after ten years of qualifying payments, have paid their debt to FedLoan Servicing – a loan company student who is ending his federal maintenance contract this year. Beginning in early July, according to Federal Student Aid, these accounts will be transferred to a new company, MOHELA, which is expected to take control of PSLF and any progress borrowers make toward forgiveness.
According to Federal Student Aid, the transfers will continue throughout the summer and will not require any further action from the borrower. If you are registered with the PSLF, here is what you need to know:
- You should receive notice of your transfer at least 15 days before it occurs, and notification from MOHELA once your transfer is complete.
- If you qualify for loan forgiveness during this time, releases will still occur and if all of your loans are forgiven, you will not be included in the transfer.
- And if you made your first PSLF request after May 1, 2022, it will be processed by MOHELA.
The Pennsylvania Higher Education Assistance Agency — the division of FedLoan that operated PSLF until now — is officially ending its contract on Dec. 14, and a spokesperson at the time told Insider that the company would work for ” ensure a smooth transition for all borrowers beyond this date — as long as it takes under the direction of the Ministry.”
But lawmakers and advocates have criticized PHEAA for mismanaging the PSLF, leaving borrowers potentially eligible for forgiveness with mounting debt and minimal guidance. Announcing her termination, Massachusetts Senator Elizabeth Warren said “borrowers can breathe a sigh of relief today knowing that their loans will no longer be serviced by PHEAA, an organization which deprived countless public servants of debt relief“. and was recently caught lying to Congress about his abysmal record of fines and penalties.”
Prior to Biden’s presidency, 98% of PSLF candidates were rejected from the program. As a result, the Department of Education announced reforms to the program in October, including a waiver until October 31, 2022 that would allow all past payments, including those previously ineligible for the program, to receive relief. . But that waiver is only four months away, meaning those borrowers must risk an account transfer subject to administrative errors — as well as a rush to receive time-limited relief.
Supporters recently called for an extension of the waiver, with American Federation of Teachers President Randi Weingarten saying “now is not the time to cut corners to bring this relief to as many people as possible, this is why President Biden needs to extend the limited PSLF waiver and help us help our members access PSLF,”
Meanwhile, Biden is also in the process of making a decision on a broad student loan forgiveness for federal borrowers. He is reportedly considering $10,000 in aid for those earning less than $150,000 a year, likely announced in July or August, closer to the expiration of the student loan payment break after August 31.
There is a great deal of uncertainty about what awaits student loan borrowers in the months ahead, but with millions of account transfers, potential student loan relief and the resumption of payments, it is clear that the Department of Education has a lot to do.
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