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Senator proposes big changes to student loan forgiveness


A US senator has proposed significant changes to student loan relief.

Here’s what you need to know — and what that means for your student loans.

Student loans

US Senator Bob Menendez (D-NJ) and Congressman Donald Norcross (D-NJ) today offers the second chance at the Civil Service Loan Forgiveness Act, which would solve the problem of the Civil Service Loan Forgiveness Program. The proposed new legislation would, among other things:

  • Allow public servants with student loans or in the civil service before 2007 (the year Congress created the program) to qualify for student loan forgiveness;
  • Eliminate the requirement of 120 payments and instead require ten years of employment in the civil service;
  • Extend the current limited waiver for the cancellation of student loans beyond October 31, 2022;
  • Allow Parent PLUS Loans to qualify for Public Service Loan Relief;
  • Allow civil servants of contractual education as well as auxiliary, contingent or part-time professors of higher education to become eligible for the PSLF; and
  • Allow teachers to qualify for both the Teacher Loan Forgiveness Program and the Public Service Loan Forgiveness simultaneously.

“Since day one, the Civil Service Loan Forgiveness Program has been plagued with problems and inadequate oversight, resulting in less than ten percent of applicants being approved for loan forgiveness despite their dedicated service to our nation”, said Menendez. Currently, public servants can get full federal student loan forgiveness when they work full-time for a qualified nonprofit or public service employer and make at least 120 monthly student loan payments.

Major Changes to Student Loan Forgiveness

This proposal follows other major proposals aimed at making student loan forgiveness more accessible to student borrowers. For example, Biden has proposed major changes to student loan forgiveness. Two congressional senators have also introduced legislation to change student loan forgiveness. Collectively, these proposals include the following:

  • Student loan repayment plans: count student loan payments made under any student loan repayment plan or type of student loan;
  • Student loan consolidation: count student loan payments made before student loan consolidation, even if you did not follow the correct repayment plan;
  • Late payments: count late or partial student loan repayments;
  • Limited exemption for student loan forgiveness: making the limited waiver permanent so that more student borrowers are eligible; and
  • Fewer requirements for the public service: make possible the cancellation of public service loans in five years instead of 10 years.

For either of these proposals to become reality, Congress and the President would go down different paths. For example, Congress would have to pass legislation, which could include “combining” different proposals into a single piece of legislation. Separately, Biden could use the rulemaking process through the US Department of Education to implement the proposed changes. Currently, the public can comment on Biden’s proposals, with final rules expected in November and implementation by July 1, 2023. In addition to potential student loan forgiveness reforms, Biden is considering large-scale cancellation student loan scale for millions of student borrowers. . In the coming weeks, Biden has three deadlines for student loan forgiveness. The president confirmed yesterday that he would make a decision on canceling student loans by August. On August 31, 2022, the student loan payment pause will end, which means student loan borrowers will again have to make federal student loan payments beginning September 1. Be sure to explore all of your student loan repayment options, including these smart ways to save money:

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