UCLA Faculty Association: (Debt) Cancel Culture

Tuesday, September 20, 2022

(Debt) Cancel Culture - Part 3

In an earlier post, we noted that many UCLA active employees and retired persons may benefit from student loan forgiveness.* However, action is required by the end of this month. Apart from the prior posting, there is information from the LA Times:

The basics of the program called Public Service Loan Forgiveness, or PSLF, seem clear: Government and nonprofit workers who make monthly payments on their federal loans for 10 years are eligible to have the rest of their debt wiped clean. But as thousands of borrowers discovered in the years since the federal program was created in 2007, enrolling in PSLF has been extremely complicated. Onerous rules and poor communication mired borrowers in confusion, shutting out many who qualify — if they knew about the program at all.

Between May 2018 and May 2019, the Department of Education loan servicers denied 99% of applications submitted for PSLF, according to a report from the federal government. But the rules have temporarily changed. To address the problem, the Biden administration introduced a waiver last year that relaxes program requirements until the end of October by making it possible for many borrowers to retroactively receive credit for previous payments that would not otherwise count...

In addition to working in public service and making 120 qualifying payments over 10 years, borrowers must meet other criteria. In the past, applicants needed a specific federal loan called a Direct loan, or consolidate other federal student loans into a Direct loan. And they had to enroll in an income-driven repayment plan, which sets monthly payment amounts according to a person’s income. Both of these requirements are suspended under the temporary waiver. Until Oct. 31, borrowers can recoup credit for past repayment periods — regardless of the type of federal loan they have or repayment plan they are enrolled in, or whether a payment was made in full or on-time.

Many borrowers could receive enough credit to have the rest of their loan balances canceled, advocates say. Others will receive credit for loan payments they’ve already made, partially reducing their loans and putting them closer to becoming debt-free sooner. The program is separate from the plan President Biden announced in August to cancel up to $10,000 or $20,000 in federal loans for borrowers who make less than $125,000 a year. Borrowers can participate in both programs as long as they meet eligibility requirements.

To receive public service loan forgiveness, borrowers must submit a PSLF form** to the Department of Education, which also requires a signature from an employer certifying a person’s employment. The department recommends borrowers complete that form annually to help track and verify qualifying payments...

Full story at https://www.latimes.com/california/story/2022-09-12/how-public-services-workers-can-wipe-out-student-loans.

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*http://uclafacultyassociation.blogspot.com/2022/08/debt-cancel-culture-part-2.html.

**https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service/public-service-loan-forgiveness-application.

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