US President Joe Biden speaks about student loan forgiveness as Education Secretary Miguel Cardona … [+]
The Biden administration announced this week that it should suspend student loan processing under a key program.
The suspension is a component of a broader transition during which the Department of Education will take over administration of several student loan forgiveness programs from contracted loan servicers. During the pause, borrowers can apply for student loan forgiveness, but won’t receive any relief until the grace period is over.
Here’s what is going on on and what borrowers have to know.
Student loan forgiveness processing for PSLF has been paused as major changes have been made
The processing pause pertains to the general public sector lending program. PSLF can provide student loan forgiveness in as little as 10 years to borrowers who work in nonprofit or public sector jobs. The Biden administration has implemented plenty of significant reforms to PSLF which have resulted in a whole lot of 1000’s of borrowers being approved for loan forgiveness. Previously, PSLF had a 99% rejection rate.
As a part of the most recent major change, the Department of Education will transition PSLF operations to its own platform from MOHELA, one in all its contracted loan servicers. Advocacy groups have accused MOHELA of inadequate service, and the Ministry of Education has also penalized the corporate for late or incorrect invoicing. MOHELA has denied the allegations, saying that criticism of its service practices has been greatly exaggerated and brought out of context.
The transition of the PSLF program to the Department of Education’s StudentAid.gov portal has been planned for a very long time. As a part of the transition to the Department of Education’s service platform, all processing of student loan forgiveness applications under this system shall be suspended from May to July this yr.
“Beginning May 1, 2024, the Public Service Loan Forgiveness (PSLF) and Teacher Education Assistance for College and Higher Education (TEACH) grant programs will no longer be administered through a specific loan servicer. Instead, we are updating our systems and contact centers to streamline and fully administer these programs through StudentAid.gov,” the Department of Education said in an announcement Notice published this week. “We will be moving these programs from MOHELA to ED on StudentAid.gov. This means that beginning May 1, 2024, we will stop processing all PSLF and TEACH grant forms.”
What Borrowers Should Expect If Student Loan Forgiveness Processing for PSLF Is Paused
The suspension of student loan forgiveness processing under PSLF is anticipated to last three months, from May to July of this yr. According to the Department of Education, your entire PSLF program will essentially pause during this time.
“Starting May 1, 2024, you will no longer be able to access your PSLF progress, certified employment, or payment counts on MOHELA’s borrower portal,” the department says. “You will not see updates to your PSLF payment numbers if you make qualified payments or confirm employment by submitting a PSLF form during the processing pause.”
Borrowers can proceed to submit their PSLF employment certification forms online through the PSLF help tool through the blocking period. However, the forms won’t be processed until after the break ends in July. “If you would like to save screenshots and correspondence for your personal records, we recommend that you access the portal by April 30, 2024,” the department suggests.
Borrowers also needs to expect that their lender may change. “If MOHELA is your loan servicer, your account may be transferred to their new servicing platform or another loan servicer after May 1,” the announcement said. “Starting in July, ED will fully administer the PSLF program, but your loans will remain with a loan servicer.”
The Department anticipates that when the transition process is complete in July, all information regarding PSLF shall be accessible to borrowers through StudentAid.gov. This includes PSLF payment counts, self-service tools, and student loan forgiveness application tracking. Borrowers submitting PSLF forms and waiting for updates on PSLF payment numbers should receive those updates after the transition is complete in July.
Processing of other student loan forgiveness can also be suspended
The transition to student loan forgiveness administered by the Department of Education – and the associated suspension of processing – won’t be limited to the PSLF program.
At the identical time, TEACH grants are also affected. TEACH grants are grants (not student loans) awarded to specific teachers. “Starting May 1, 2024, processing of all TEACH scholarship forms will be paused while we transition the program to ED on StudentAid.gov. This transition will continue until fall 2024,” the department says.
Later this fall, the Department of Education can even transition the full and everlasting disability discharge program in the identical way. The TPD Discharge Program provides student loan forgiveness to borrowers with health impairments. Nelnet, one other departmental service provider, currently manages TPD discharges.
