The announcement from the federal government surprised Lee Dossett, a doctor in Lexington, Kentucky. “Congratulations!” it started.
After a few years refused for a Student loan forgiveness program designed for public servantsDossett, who has worked in the nonprofit sector for 10 years, was told last week that not only had his application been reevaluated, but the Department of Education had determined that he should have a outstanding balance for medical school completely removed – worth about $75,000.
“I was completely shocked because I honestly gave up on getting it,” Dossett said.
But a record number of student loans are reaping the same benefits after the Biden administration in October started to relax the strict rules around Public Service Loan Forgiveness, launched in 2007 to help teachers, health care workers, military personnel and other civil servants earn debt relief on their federal loans . As of last week, more than 70,000 borrowers were eligible for debt forgiveness, with a relief amount of about $5 billion, The Department of Education said.
Before the overhaul, only 16,000 borrowers out of about 1.3 million enrollees had signed up for the remaining balance of their loans to be erased through the program, according to federal data.
Cody Hounanian, executive director of the Student Debt Crisis Center, a nonprofit that advocates for student borrowers, said the sudden announcement of debt relief was a blessing. for many applicants who have correctly made 120 monthly payments or have been denied because they accidentally signed up for the wrong payment plan or had the wrong loan type or other technicality.
“It was emotional,” Hounanian said of the wave of financial aid. “It is changing their lives for the better.”
Students who have benefited from student loans in recent days are sharing shocking news on social media.
But the latest reversal is also a “double-edged sword” for many borrowers, Hounanian said.
Those hoping to qualify will have until October 31 to submit an application under the limited waiver period. The federal government says there could be as many as 550,000 borrowers benefiting. Additionally, previous student borrowers who may have been disqualified because they borrowed through the Federal Family Education Loans, a program that ended in 2010, are now eligible. The point is that they will have to make sure those loans are consolidated into a new federal direct loan.
The process is more complicated that last year, two major student loan companies – Directional and the Pennsylvania Higher Education Assistance Agency, commonly known as FedLoan – announced they had terminated their loan service contract with the federal government. Some 16 million student loans are being turned over to new servicers, a monumental undertaking that student advocates worry could lead to a host of bureaucratic problems – and only make applying for the loan. The already troubled Public Service has become much more difficult.
“Unfortunately, there are some people with this news that debt relief can be achieved who may find the process confusing,” Hounanian said.
But the federal government says it is trying to simplify the steps, with about 22,000 initial borrowers automatically canceling their loans.
In December, President Joe Biden also announced that the federal government would extended moratorium on all federal student loan payments through May between the pandemic and increase in consumption costs.
The White House still faces pressure to cancel student debt and help more borrowers — more than 44 million Americans owe about $1.7 trillion in student loans. ONE town hall was scheduled for Thursday between advocacy groups like the Student Debt Crisis Center and Democratic lawmakers, including Senate Majority Leader Chuck Schumer in New York and Senator Elizabeth Warren in Massachusetts, to call for student debt forgiveness.
At the very least, advocates say, the relaxation of rules around a program like Public Service Loan Forgiveness should be permanent. One year 2019 Government Accountability Office Report found that the Department of Education under its previous secretary, Betsy DeVos, rejected a staggering 99% of applications as part of a temporary expansion program in 2018.
Jane Saunders, who received her doctorate at the University of Texas at Austin in 2008 and taught English for a decade, didn’t know about federal student loan forgiveness until a friend suggested she consolidate her loans. his loan in 2011.
But a few years passed before she realized her mistake: Her loans were being processed by a servicer who didn’t qualify her for the program. She then switched waiters, but at one point, after years of making payments, she was told that some of them weren’t counted and the rules were getting tighter. The show let her down.
“It looked like they were building the plane while we were on it,” Saunders said.
But her luck reversed in December, she said, after she applied for relief again after the Biden administration changed some of the program’s requirements. She knew her outstanding debt — $106,000 — had been wiped out, and she also received a credit for several months that she paid more than was necessary.
Saunders said: “I couldn’t breathe when I saw the zero balance. see another potential life in front of me. A place where I can buy a car or maybe take a summer off for once.”
The stress of her student loan obligations while working as a teacher, earning a PhD, and having to pay rent and other financial burdens leaves her feeling devastated as she tries to go. retirement. She said she remained cautious.
“Even if I try to pay more when the loans are gone, I will probably work until I’m 70,” says Saunders, 56.
But despite all the hysteria, Saunders said she has no regrets about earning her degree. Dossett, who, after seeing his medical school loans forgiven, also did not share his surprise in a viral tweets.
During the pandemic, Dossett helped care for hospitalized patients with Covid, and his exhaustion and anxiety about student debt were taxed.
But now, he says, he sees a path forward for not only himself but others who may want to pursue medicine, especially those uncertain about medical school because of their initial debt. head they may have to bear.
“With forgiveness in sight, doctors will be more willing to go into lower-paid specialties, such as primary health care and pediatrics,” he said. “The more of these doctors there are, the better for society and the health of the nation.”
https://www.nbcnews.com/news/education/federal-student-loan-forgiveness-program-fulfills-elusive-promise-eras-rcna13364 The federal student loan forgiveness program makes an elusive promise: Debt forgiveness