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Once-disastrous Public Service Loan Forgiveness program gets a revamp: Tara Britton

Once-disastrous Public Service Loan Forgiveness program gets a revamp: Tara Britton
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Guest columnist Tara Britton is the director of public policy and advocacy for the Center for Community Solutions.

Many of us in nonprofits and the public sector shudder when we hear the phrase “public service loan forgiveness.”

Public Service Loan Forgiveness, or PSLF for short, was signed into law in 2007 to grant federal student loan forgiveness to anyone who has paid 10 years (120 total) while working in the public or nonprofit sectors.

It seemed like a simple enough idea. But when the first people eligible for tolerance began applying in 2017 to the US Department of Education, it was a real programmatic disaster.

Less than 5 percent of loan forgiveness applicants were approved, despite tracking payments and employer status for a decade.

Myriad causes have been identified as contributing to the chaos: miscommunication through the PSLF loan service, the uncertain status of employers, payments missed in the count or borrowers paying under a repayment plan that did not qualify for PSLF – though many are told They were. on the right track.

During the 2020 presidential campaign, incumbent President Joe Biden committed to resolving issues with the PSLF and honoring the commitment to public servants who relied on the PSLF 10 years after the payments.

Federal student loan payments and interest accrual have been on hold since March 2020 due to laws passed to provide relief from the COVID-19 pandemic and executive actions from former President Trump and President Biden.

The Department of Education has taken this time to address some of the major issues with the PSLF, and under a plan announced in October – the PSLF Limited – many of the problems plaguing the program will be addressed.

Many of the details are still being worked out, but some people are already receiving loan forgiveness — including some who have been denied in the past.

All of this means that things are finally going in the right direction. There is a key word to watch out for though – Limited. Although there are more permanent reforms to the PSLF, this plan is temporary and expires on October 31, 2022.

This is where employers can come in.

With all the talk about workforce challenges, employers in the nonprofit and public sectors need to be aware of the PSLF, guide their employees through the process of tracking payments (which is done on-the-job for eligible employers), and help them gauge whether payments can be made. Calculate it during previous employment and provide these services as a job incentive.

Ohio, as part of its Workforce Initiatives, should support employers in this effort by allocating some COVID relief funds to a directory or contact person that can provide PSLF support to employers.

A limited PSLF plan can help someone who has worked in the public service calculate more payments toward forgiveness than they were previously eligible for, so employers can help spread the word among their current employees as well.

And while working and paying for 10 years is a long way to go, some people have recently made eligible payments to count into the PSLF account and can move forward with their payments.

Student loans, in general, are soaked in baffling language that makes you search all over the internet for answers. Add a PSLF on top of that, and you might just throw in the towel and pay into whatever plan you’re signed up for automatically.

Eligible employers, nonprofit organizations, and public agencies must become PSLF experts to provide support to their employees. And thanks to a fall expiration date, the clock is ticking.

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