March 27 (UPI) — Graduates who failed to qualify for a student loan forgiveness program the first time are getting a second opportunity — as part of last week’s $1.3 trillion federal spending bill.
The large omnibus bill includes $350 million for the Department of Education to forgive student debts of borrowers who meet the conditions required to qualify for the Public Service Loan Forgiveness program — introduced about a decade ago — but mistakenly became enrolled in repayment plans which were ineligible for loan relief under the program.
The PSLF program forgives borrowers’ Direct Loans after they have made 120 qualifying monthly payments in full and on time and through one of four income-driven repayment plans. Plus, they must have worked 10 years in a public service job with a qualifying government or nonprofit employer.
Under the new budget law, the Department of Education will distribute the $350 million to borrowers who have made payments on a graduated or extended repayment plan even though those plans don’t normally qualify.
Eligible borrowers will be able to apply for the second opportunity in about 60 days and the funds will be distributed on a first come, first served basis.
Of 740,000 borrowers who submitted at least some employment certification paperwork for loan forgiveness by last September, about one-third made no payments that qualified, according to the Department of Education.
“I think that this bill’s language brings a significant benefit to borrowers,” said Betsy Mayotte, president and founder of The Institute of Student Loan Advisors. “Congress recognizes that the communication about the Public Service Loan Forgiveness program was not as robust and clear as it could have been.”
The PSLF program was introduced under President George W. Bush in 2007 to allow teachers, social workers, military personnel and other public servants the flexibility to pursue lower-paying careers without the burden of years worth of loan payments.
Congressmen Brendan Boyle, Ryan Costello, John Sarbanes and Brian Fitzpatrick introduced legislation last year to “fix a glitch” in the program that left some borrowers believing they were making qualifying payments when they were not.
“Rather than let good actors slip through the cracks, we’re fighting to provide relief to all those who fulfill the spirit of the program despite paperwork errors or bureaucratic complications,” Boyle said.