Student loan forgiveness game changer

If you are requesting the cancellation of a student loan, this new tool could be a game changer.

Here’s what you need to know.

Forgiveness of student loans

The United States Department of Education, led by Betsy DeVos, has made a significant change that may facilitate understanding of the possibility of obtaining a student loan forgiveness through the public service loan forgiveness program. The Public Service Loan Forgiveness Program is a federal program that forgives federal student loans to borrowers who are employed full-time (more than 30 hours per week) in eligible employment in the federal, state or local or 501 (c) (3) non-profit job making 120 eligible time monthly payments.

The new change concerns employers who are eligible for student loan forgiveness, which has been confusing for many student loan borrowers. Among other requirements for the delivery of public service loan, you must work for a qualified public service or a non-profit employer. Remember: it’s your employer, not your role that matters. It is not enough to say that you work in the public service. You must work for a licensed employer to be eligible for the student loan forgiveness. Previously, the Department of Education provided an online tool to help borrowers determine if their employer is eligible for a public service loan discount by selecting one of five types of employers. However, the tool had limitations because it did not contain any information specific to the employer. Now the Department of Education has updated the tool to create more transparency and help student borrowers. Currently the employer database contains over one million eligible employers.

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Student loans: what’s the update?

the Public Service Loan Forgiveness Help Tool (PSLF) on the Federal Student Aid (FSA) website has been updated as follows:

• There is now an improved employer search function that allows you to determine if your employer is eligible to receive a student loan forgiveness.
• Once logged in with your FSA identifier, you can use your employer’s federal employer identification number (FEIN or EIN) and dates of your employment to search specific new employer information in a new employer database. employer’s eligibility.
• Then identify your employer in the employer database.
• Then you will receive immediate notification of your employer’s eligibility status as being eligible, ineligible or likely ineligible for the public service loan forgiveness.

The term probably ineligible mainly refers to non-profit organizations which are not 501 (c) (3). If you work in one of these non-profit organizations, it is unlikely that you will be approved for student loan forgiveness.

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Why is this game changing?

This may seem like a small change, but it is not. If you or someone you know has taken the public service loan forgiveness program, understanding if your employer is eligible is a major problem. This change to the employers’ database will increase transparency and help in the front that you meet at least one student loan forgiveness requirement. As of April, approximately 147,000 borrowers had been turned down for loan forgiveness. Why? There are several reasons, but here are the most popular:

• Eligible payments: 58%
• Missing information: 23%
• No eligible loan: 14%

The second category – Missing information – relates directly to the employer certification form that borrowers submit to the utility loan forgiveness. Why? When you begin the public service loan remittance process, you must complete a Job certification form. You must submit a job certification form to the United States Department of Education when you start a public service or nonprofit job, when you change employers, and annually to make sure you are on the right track. . About 44% of the job certification forms were found to be ineligible. The first reason is the lack of information (80% of the forms not eligible). Hopefully this improved tool will reduce confusion and increase the approval rates for loan forgiveness to public servants.

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Student loan forgiveness: more advice

Here are some additional tips for applying for a student loan:

1. Choose the best student loan repayment plan based on income

It is important to select the best income-based repayment plan for you, and then make the majority of your eligible monthly payments while being enrolled in an income-based repayment plan. There are four main income-based repayment plans: income-based repayment (IBR), source payment (PAYE), payment on revised date (REPAYE), and income-based reimbursement (ICR) . About 58% of borrowers were rejected for making ineligible payments.

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2. Consolidate Federal Student Loans

Remember that only direct student loans can be canceled. If you have Perkins loans, FFELP loans, or borrowed student loans before 2011, you may need to consolidate these federal student loans into a direct consolidation loan. About 14% of borrowers were turned down for ineligible student loans.

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3. Refinance student loans

Remember this: the public service loan forgiveness only applies to federal student loans. So you need a game plan for your private student loans. What should you do Refinance private student loans and get a lower interest rate. Student loan refinancing rates are now incredibly low and start at 1.99%.

This student loan refinance calculator helps you save a lot of money by refinancing your student loans.

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How to repay student loans faster

Student loan forgiveness may or may not be best for you, given the number of requirements and the time it takes to receive student loan forgiveness. What is the best way to repay student loans? Start with these four options, which are all free:

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