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Department of Education announces changes to wipe out student loans of public service employees

The new changes to the Public Service Loan Forgiveness program are said to help some 550,000 workers.

CLEVELAND — The Department of Education is announcing sweeping changes to help wipe out student loan debt of public employees.

“[This] speeds up, the forgiveness clock, where people could actually get forgiveness today that maybe thought they had years to go,” said Meagan Landress, a certified student loan professional with Student Loan Planner.

The ED is making some pandemic changes to its Public Service Loan Forgiveness program or PSLF. It's meant to forgive federal student debt after 10 years of monthly payments, if you work full-time in a public job, like teachers, police officers, or members of the military, and workers at non-profit organizations, like a hospital.

The payoff can be incredible. But since the program’s start in 2007, it's had a 98% rejection rate.

“It's really more of an art than it is a science sometimes on paying down the student loans,” said Jonathan Clark of Clark Wealth Management, an investor advisor representative with Brookstone Capital Management.

Clark works through loan issues with his wealth management clients, and saw it play out with his own wife, a nurse.

“When we applied, she got denied because of the type of loan she had didn't qualify, despite having 15 years in the business, in the nursing field,” he said.

“Historically, there's been a lot of confusion about those,” said Landress. “So a lot of folks have missed out on qualifying payments going towards this forgiveness program.”

Now borrowers have a significant, but temporary opportunity to right some of those mistakes.

“This is going to expire October 31st, 2022. So we have a whole year, uh, to get this ironed out,” she said.

If you work or have ever worked in public service, and have federal loans, you can confirm your own status by logging in on studentaid.gov. 

There you can find a one-sheet explaining the process. There are two necessary steps. Consolidation is one.

“I don't mean refinance or take it to a private company. You can consolidate within student aid.gov for free,” said Landress. “You don't need to pay anybody to do this consolidate for free through studentaid.gov that's first step. And then second step is you have to submit what's called an employment certification form or ECF for short, for all time periods, where you worked in public service.”

“There's a PSLF help tool that you can search in the bar. It'll help you pre-fill all the information out for each employer. You'll have to print a separate document for each employer if you've had multiple. And then, take that to your employer for their signature,” she said. You can find that tool here

For everyone else still looking at student debt, the federal government is still debating more relief. President Biden campaigned on the idea of a $10,000 dollar loan forgiveness for all. As recently as two weeks ago, Senate Democrats were calling to cancel up to $50,000. The president has said Congress must act to cancel those loans, instead of an executive order.

Student Loan Planner works with individuals to best position them for any changes. They’d expect any future loan cancellation to cover other federal loans, not private ones.

“There's lots of ideas being thrown around. So if you want to hold on for the potential, guard your heart, cause I'm talking about potential here,” said Landress, “Keep the loans federal for now until we know a little bit more.”

It’s easy to wait and see now, as payments are still not due until February 2022.

“Taking the loans to a private company is a permanent decision. We can't come back to the federal system if you've already done that,” she said. “So if something comes about later, we can't take advantage of it if we've already privatized our loans. So that's probably the best advice I can give is just if you're interested in maybe seeing, if anything better could come to fruition for you, keep the loans federal for now .”

While your situation is individual, there are several Facebook groups on the topic are often helpful places to crowdsource information from people on PSLF and other student loans.

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