Student loan forgiveness for public-sector workers such as teachers and nurses will be temporarily paused beginning May 1 as the Department of Education moves management of the program in-house.
The transition is expected to last through July and will impact about 2 million borrowers enrolled in the Public Service Loan Forgiveness program, or PSLF, which cancels student debt remaining after an eligible borrower has made 120 monthly qualifying payments.
The federally contracted student loan servicer MOHELA (Missouri Higher Education Loan Authority) is currently tasked with servicing the accounts of these borrowers. But after the transition, borrowers will find their up-to-date payment counts and other information at the Federal Student Aid office’s website.
The change will also apply to the Teacher Education Assistance for College and Higher Education (TEACH) Grant program, which provides money to students who are planning to teach certain subjects in low-income districts. The grants, which are converted to loans if requirements aren’t met, are also serviced by MOHELA.
The transition is part of a larger overhaul of the federal student loan system that will happen in phases over the next few years. It’s meant to streamline processing and improve customer service.
The PSLF program had previously been plagued by administrative problems. Many borrowers, for example, were inappropriately steered into forbearance by their student loan servicer when they could have been making qualifying payments that counted toward the 120 required for debt relief. The Biden administration has made it easier to qualify for the program, canceling $62.8 billion for nearly 876,000 borrowers to date through PSLF.
Here’s what borrowers need to know:
The loans will still be held by a student loan servicer.
But MOHELA will no longer be the only servicer handling the loans of borrowers enrolled in PSLF. An estimated 1 million borrowers could soon see their loans transferred away from MOHELA, according to the Department of Education.
However, borrowers will submit their PSLF forms – to certify eligible employment or apply for forgiveness – through StudentAid.gov. The website is also where borrowers will be able to track their payment progress.
Yes, monthly payments are due like they are normally.
Borrowers will be able to submit forms to certify employment or apply for forgiveness – but they won’t be reviewed until the transition is complete.
Normally, once borrowers make their 120th qualifying payment, they can apply for debt relief. But since forms won’t be processed during the pause, borrowers will have to wait for their debt to be canceled.
Impacted borrowers can request a forbearance from their servicer, during which they won’t have to make additional payments. But any payments that are made in addition to the 120th will be refunded to the borrower or applied to their other outstanding federal student loan debt, according to the Department of Education.
No, borrowers will not be able to see their PSLF payment counts. The information will be available on StudentAid.gov after the pause ends.
After the transition is complete, StudentAid.gov will provide real-time, accurate information on payment counts and processing. Borrowers will also be able to call the Department of Education’s contact center directly for any questions about PSLF.
Processing times will be faster, the department said.
TEACH Grants are converted to loans when the recipient does not complete the required four years of teaching service. He or she must teach in a low-income school district and in a high-need subject area such as math, science, a foreign language or special education.
Once the four years are completed, the grant recipient must submit a form documenting qualifying teaching service. Those forms won’t be processed during the transition, which will last into fall 2024 for the TEACH Grant program.
During the pause, the form can be submitted by mail or the recipient can wait until the fall to upload it online.
