Student loan cancellation is much closer for some borrowers, and they are pumped

The U.S. Department of Education has started emailing thousands of teachers, nurses, and other government officials telling them they may have some of their federal student loan debt wiped out months – even years – earlier than borrowers expected.

Education Secretary Miguel Cardona highlighted the decision on Friday evening on Twitter: “Our first batch of PSLF loan cancellation emails have all been sent to those with direct consolidation loans and certified employment – check your inboxes! And if you haven’t received any , hang in there! Others are on their way. “

The flood of emails comes after the Ministry announced that it will revise the troubled Civil Service Loan forgiveness program (PSLF), including granting borrowers retroactive relief from some of its more stringent rules. As a result, the ministry estimates it could write off the student loan debts of nearly 50,000 public service workers and help half a million more get closer to their promised loan cancellation.

Some borrowers who received emails and told they would get extra credit for loan cancellation took To social media To celebrate.

When Victoria Chamberlin heard the news, it hit her: it could mean the end of her $ 70,000 student loan debt. The US Army veteran says she and her husband were cautiously elated.

“By the time our baby is 3 years old,” says Chamberlin, “we won’t have any student loan debt anymore. And it’s just amazing. We never thought it would be possible.”

Zahra Nealy says she was listening to NPR one morning when she heard the news of the waiver that would likely help her too.

“I was so excited when I heard [it] in the shower I made sure I didn’t slip! “

Years of mismanagement have created a nightmare for borrowers

To appreciate the excitement – and relief – of thousands of public service borrowers, you have to understand how a program that was supposed to do so much good ended up causing so much pain.

The civil service loan forgiveness program was launched in 2007 to encourage borrowers to work in the civil service. But the rules were strict and poorly communicated by the Education Department to companies that handle student loans. These companies then spent years mismanaging the program and misinforming borrowers.

“I don’t have a heartbreaking case where I was on the wrong repayment plan or my payment was staggered by a dime. I did everything exactly right,” says Chamberlin, who nonetheless broke the schedule. after she and her husband enlisted in the military.

On several occasions when the couple attempted to recertify their income, as the program regularly requires, Chamberlin said the company that manages their loans wrongly increased their monthly payments.

“And then we had to abstain while they figured it out,” Chamberlin recalls, “because we were both on active duty and couldn’t afford [the higher payments]. “

This constant back and forth – correcting payments, then restarting – was exhausting, Chamberlin says, especially from military bases in Germany and South Korea.

“I should go to base and use the secure phone that you can call the United States with but that you’re not supposed to use for personal reasons,” Chamberlin recalls. “It’s just awful.”

New waivers could transform the financial future of borrowers

These stories of PSLF errors abound – and a big reason the education department is giving borrowers retroactive waivers of some of the program’s toughest rules.

Borrowers who were disqualified for being in the wrong repayment plan, for example, or for having had the wrong type of loan can now get credit for past payments. In fact, in an email Friday, the department informed Chamberlin that she would need to get credit for at least 11 months she spent paying off the wrong type of loan. According to the details of the overhaul, she is also expected to get credit for the months her payments were suspended while she was on active duty.

Chamberlin now works for a private company, but says she has served more than enough time to qualify for pardon. “It sounds dramatic, but if my loans can be canceled, I won’t have to quit the job that I really love.”

Zahra Nealy spent nearly a decade working for nonprofits in Southern California, and like Chamberlin, she also had a problem with paperwork. But now she’s back on track.

“I’m at nine payments to be eligible for a loan forgiveness,” says Nealy. That means she made 111 eligible-time payments and is now less than a year away from paying off some of her student debt. Somebecause she has always had two types of loans. Half of its debts are eligible for the PSLF; half no. About $ 140,000 in all.

But after the Education Department announced it was relaxing its rules, Nealy learned that potentially all its loans could be eligible for forgiveness and could be written off within a year. “Which would be huge! Nealy said laughing in excitement.

She says that due to her debts, homeownership has become inaccessible. But soon, maybe not.

And this news makes her feel something she’s not used to feeling about her student debt: “Hope,” Nealy says. “It really is hope. In a desperate time.”

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