Major Student Loan Forgiveness Program Reinstated, Eligible Borrowers May See Debt Cancellation

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The U.S. Department of Education has restarted its review of Public Service Loan Forgiveness (PSLF) applications after pausing since May.

This pause allowed for the transition of borrowers away from MOHELA, the former exclusive PSLF servicer, to multiple federal servicers. The program, designed to cancel student debts for individuals working in government and nonprofit sectors after 10 years of qualifying payments, is now directly managed by the Education Department through the portal.

During the application standstill, changes were installed to better track and update payment counts for PSLF participants, ensuring that all payments made are recognized. The Department of Education also promises to hasten the loan forgiveness for those who qualified during the pause. Applicants approved for forgiveness will receive notification from both the department and their servicing agent once the discharge process is finalized.

For those who feel they have made the necessary number of payments but do not see this reflected in their account statements, they have the option to request a forbearance while their case is reviewed. It should be noted, however, that if the application is subsequently denied, any payments made during the forbearance period will not count towards forgiveness, and borrowers will be liable for payments and accrued interest during that time.

These updates are part of a broader effort by the Education Department to revamp the student loan system, making it more transparent and easier to use. The department is also working on one-time adjustments to account for all payments toward PSLF and other income-driven repayment plans to ensure borrowers are credited accurately, potentially advancing them toward qualifying for debt relief.

Alongside these improvements to PSLF, the Education Department is finalizing a comprehensive debt relief strategy projected to aid over 30 million borrowers and expected to launch this fall. However, the upcoming presidential election and potential legal obstacles might challenge the broad loan forgiveness plans, leaving their future undecided.

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