What CARES Act Means for Loan Forgiveness for Government Students
The government has granted a temporary grace period for student loan borrowers who are repaying federal loans. But while it’s nice not to repay your loans for months, it confuses one group of borrowers in particular: those looking to pay off the remaining loans under the government service loan forgiveness program.
Statements by the Department of Education and President Trump, later backed up by the CARES Humanitarian Aid Act, make it pretty straightforward: For most federal borrowers, you are not required to make payments between mid-March 2020 and September 2020. time, new interest on your loans will not be charged. Failure to pay will not adversely affect your billing history or credit score; if you pay any amount, it will be used to repay the loan principal.
But PSLF borrowers have strict rules for being eligible, including 120 monthly payments and an annual certification that they are employed in the public service. The CARES Act says a six-month period of assistance will count towards PSLF, but this program has a very low approval rate . It is logical that civil servants want to be absolutely sure that they are taking the right steps to maintain their status.
I asked Adam Minsky , a lawyer specializing in student loans, what the CARES Act really means for PSLF applicants.
First things first: The suspended months are still considered “qualifying payments” to the PSLF, Minsky said. But you have to fulfill your side of the bargain: work full time for a suitable PSLF employer.
If you encounter any changes in your employment status during this period – for example, reduced working hours or vacation periods – make sure you obtain and keep records of these fluctuations in case there is a further question about your eligibility. …
One aspect of the suspension period that we discussed earlier is that it might make sense to work on paying off the loan balance during that time, as long as no interest is charged on that balance. But for the up-and-coming PSLF, the goal is forgiveness , right?
“Borrowers on their way to PSLF can continue to seek loan forgiveness without making any payments, provided all other PSLF eligibility criteria are met,” Minsky said. “Thus, some PSLF borrowers may find that there is no point in making any payments.”
If you try to get loan forgiveness and feel quite confident that you will comply with the criteria in the course of his 10-year period, it probably makes sense to send any extra money that you have right now, in your fund emergencies or retirement savings. Getting a loan won’t matter much if your goal is to put in 10 years of work to wipe out the balance.
Minsky stressed that if you have questions about your eligibility for benefits right now, you should contact your loan agent, “as different lending institutions have different attitudes towards the current climate.”
During this time, when your loans have a little extra breathing room, it’s a good idea to develop the habit of checking your PSLF status. You must file form of the certificate of admission to the job every year, even if you have not changed jobs, and regularly ask your staff – we had previously recommended twice a year – to ensure that you are on the right track.
“If the borrower believes that the service staff has made a mistake or is underestimating the amount of the corresponding PSLF payments, he should immediately dispute this with his service agent and request an audit or reassessment,” Minsky said.
Are you the encouraging PSLF who spoke to your loan agent? If you’ve learned any helpful tips on managing your right to forgiveness during this time, share them in the comments.