I did public service. Is my student loan going to be forgiven?

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Q. I was told by my loan servicer that my government service as a county public defender does not qualify for loan forgiveness. Is that correct?
— Frustrated

A. There’s been a lot of talk about President Joe Biden’s forgiveness of $10,000 of student loans for certain borrowers.

But before then, there was a forgiveness program that helped some borrowers.

The Federal Public Service Loan Forgiveness program was created in 2007 under President George W. Bush, said Marnie Hards, a certified financial planner with Aznar Financial Advisors in Morris Plains.

She said the promise of the program was simple. It would remove the burden of student debt on certain public servants and allow many borrowers to take on jobs that they may not otherwise have been able to take. After 10 years of work in public service and 120 qualifying payments, your student loans would be forgiven, she said.

“Unfortunately, the program has faced many problems over the years resulting in 99% of processed applications being rejected,’ Hards said. “There are many flaws in the program that have led to millions of applicants being denied forgiveness due to clerical issues and servicing failures.”

In part due to these issues, individuals enrolled in the Public Service Loan Forgiveness program will have a new student loan servicer this summer, MOHELA. Once your account has been transferred, you should receive instructions on how to login to the new portal, she said.

For those who were enrolled in PSLF and previously rejected for forgiveness, you can apply for a limited PSLF Waiver, which will allow a larger number of public service borrowers to retroactively count loan payments and reapply for relief. The deadline is Oct. 31, 2022, she said.

Hards said if you want to apply for the waiver, you should do so as soon as possible. If you have a FFEL or Perkins loan, you will need to consolidate them into Direct Loans before you apply for the waiver, and this process can take up to 45 days.

For more information about the PSLF policy change and to see if you are eligible for the program, you can visit a help tool here.

If the Department previously said your employer was not eligible for PSLF then you need to submit a new form through the PSLF Help Tool to see if you can receive credit toward forgiveness, Hards said. You are also able to see which employers the department has deemed eligible.

“Please note that the waiver does not affect qualifying employer rules,” she said. “The employer still needs to be a governmental organization, a 501(c)(3) organization, or a not-for-profit organization that provides a designated public service to get PSLF under normal rules and the Limited PSLF Waiver.”

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This story was originally published on Aug. 29, 2022.

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