By Kaitlyn Dunphy, Esq.
It is no secret that with the ballooning cost of higher education in this country, many individuals find themselves burdened with the costs of student loans, including many NJEA members. According to recent statistics from the National Education Association (NEA), 45% of educators, including both teachers and educational support professionals, have taken out student loans to help pay for their education. Of that 45%, 53% currently have a remaining balance on their loans. The average remaining student loan balance is $58,700, with 32% owing $65,000 or more, and 14% owing $105,000 or more.
In 2007, the federal government started the Public Service Loan Forgiveness (PSLF) Program. The basic premise of the program was to induce citizens to, and reward them for, public service by forgiving their Direct Student Loans after 10 years of public service, provided they worked full time for a qualifying employer and made 120 full on-time payments under a qualifying repayment plan. In practice, the program has been plagued by mismanagement and has been notoriously difficult to navigate, with little accountability for the private lenders involved. This past summer, the Biden administration solicited and received over 48,000 comments on how to improve the PLSF system.
The U.S. Department of Education (USED) heard those comments and recently announced changes in an effort to restore the broken promises of the PSLF program. The USED is instituting a limited-time waiver, with a deadline of Oct. 31, 2022, where qualifying student borrowers can receive credit for past payments from all federal loan programs or repayment plans towards loan forgiveness, including some payments or loans that would not typically be eligible.
Typically, only Direct Loans are eligible for loan forgiveness. During the waiver period, payments made on other loans, namely Family Federal Education Loans (FFEL) and Perkins Loans, as well as loans from older programs, such as Federally Insured Student Loans (FISL) and National Defense Student Loans (NDSL), will also be eligible for PSLF. To qualify, those loans will first have to be consolidated into the Direct Loan program.
During the temporary waiver period, prior payments will be credited toward loan forgiveness regardless of the loan program, repayment plan, or whether the payment was made in full or on time. This change applies to those with Direct Loans, those who have consolidated into Direct Loans already, or those who do so by the Oct. 31, 2022, deadline (including FFEL, Perkins, FISL, and NDSL loans). It only applies to student borrowers, not parent loans.
Eligibility rules and application process
Some of the original eligibility requirements remain in effect. The borrower must work full time for an eligible employer, which includes government employers and some not-for-profits (union employment is, unfortunately, not eligible), during the period of repayment. Multiple eligible part-time jobs can be combined to meet the full-time requirement. One hundred-twenty qualifying payments must be made in order for a borrower to be eligible for loan forgiveness. Periods of deferment, forbearance, and default still do not qualify. However, military service members whose loans were deferred or in forbearance during active military duty can now receive payment credit for the period of active duty. Payments suspended as part of COVID-19 emergency relief will also be credited if all other qualifications are met.
Borrowers will have to submit the PSLF form, which is the application used to review employer certification, payment counts, and processing of forgiveness, on or before Oct. 31, 2022, if they have not done so already in order to have previously ineligible payments credited. For those that have already submitted PSLF forms for existing Direct Loans and loans already consolidated into the Direct Loan program, the USED will be automatically reviewing those accounts for additional payments that can be credited towards PSLF. Borrowers should ensure that their loan information and employer certification is up to date. Those with other types of loans will have to consolidate their loans into the Direct Loan program first and then submit the PSLF form. Consolidation of loans, submission of PSLF forms, and other information about the PSLF program can be found by visiting studentaid.gov/pslf.
NEA has partnered with Savi to help members navigate their student loans. Savi offers webinars as well as an online tool where members can input their loan information, and Savi will help them determine their eligibility for credit towards loan forgiveness. You can login or register for a Savi account by visiting app.bysavi.com/account/login. You can register to attend a Savi webinar by visiting bit.ly/savievents .
NJEA’s Organizational Development consultant Andrew Lewis also offers monthly Degrees, Not Debt Webinars. You can register by visiting njea.org/dndwebinars. These programs are free for NEA-NJEA members.
The USED predicts that over 550,000 borrowers will benefit from this waiver, with the average person receiving credit for 23 additional payments towards their loan forgiveness. Of those, the USED expects 22,000 borrowers to be immediately eligible for total loan forgiveness, and 27,000 borrowers to potentially qualify for $2.82 billion in forgiveness if they certify additional periods of qualifying employment. Make sure to learn more about this temporary waiver and take any necessary action—you could be one of those borrowers!
Kaitlyn Dunphy is an associate director of NJEA Legal Services and Member Rights in the NJEA Executive Office.