Department Of Education Announced

On Tuesday, April 19, 2022, the current presidential administration announced reforms for student loan forgiveness and the income-based repayment programs. 

The U.S. Department of Education (DOE) will grant immediate student loan forgiveness to 40,000 borrowers. Another 3.6 million borrowers are expected to benefit by setting up their path of eliminating their student loan debt.  By “immediate” the Department has indicated that they will begin processing files for eligible borrowers immediately and the results of that process will take effect in the next three to six months.

The current administration’s goal is to focus on the federal government’s ability to forgive student loans and modify the repayment programs to make them fairer to borrowers. 

The income-driven repayment (IDR) plans such as income-based repayment (IBR) and revised pay as you earn (REPAYE) have suffered many issues throughout the years. 

Borrowers in the millions have been placed in forbearance instead of an income repayment plan. As a result, many borrowers have not been earning months toward complete student loan forgiveness at the end of their 10, 20, or 25 year loan periods.

The original IDR rules only focused on time spent in repayment under a particular IDR plan that was allowed to be counted towards student loan forgiveness. 

Under the Public Service Loan Forgiveness Program (PSLF), the borrower could only eliminate their student loan debt within ten years if their career was full-time (30 hours or more per week) and the borrower worked for the government or a nonprofit organization. 

The current administration created a provisional initiative called Limited PSLF Waiver. The waiver is designed to extend different options for repayment plans that an borrower can qualify for under the PSLF.

These changes under the current administration will help many individuals gain access to forgiveness and relief for student loans. 

The Department of Education will grant a modification to borrowers’ accounts to allow past periods of repayment and repayments that were not under any of the available IDR plans. 

The borrower’s repayment would tally towards the 20 or 25-year IDR loan forgiveness provision.

With the changes to the PSLF program, the current administration will help former students combat their student loan debt. On top of the PSLF program, the federal government has paused student loan repayment through August 31, 2022. 

The current administration hasn’t decided whether they will cancel any student loan debt outside of the revised guidelines or delay repayment past August 31st, 2022. The current administration has already taken action by canceling 725,000 borrowers’ debt worth more than 17 billion dollars.  Most of this cancellation occurred through the Total And Permanent Disability Discharge (TPD), the Closed School Discharge (mainly for those borrowers who attended fraudulent colleges), and the Limited PSLF Waiver.

WHAT THIS MEANS FOR YOU: Hope Credit has successfully helped our clients get more than $2 million in student loan debt forgiven under the Limited PSLF Waiver since it’s implementation in October of 2021.  However, this massive success did not benefit any clients who didn’t qualify for PSLF due to their employer’s PSLF status.  With the new changes announced by the DOE on April 19th 2022, Hope Credit will now begin the process of maximizing forgiveness for our clients who fall under the traditional 20 or 25 year IDR forgiveness plans.

For the majority of student loan borrowers, it is unlikely that the changes will result in complete forgiveness for borrowers under the 20 or 25 year terms.  However, the adjustment to the total number months a given borrower has accumulated toward the 20 or 25 year plans will move those borrowers months, years or even decades closer to that ultimate goal of forgiveness.

As an example, a borrower has had their student loans in repayment for 15 years but has only been in the income-based program with Hope Credit tracking their months for the last 3 years.  The DOE would look back at any forbearance periods that exceed 12 months at a time or 36 months in total, and then credit the borrower those months as if the borrower had been in an IDR program, making the payments on time, and tracking those payments toward forgiveness.  These additional months can add up and push a client closer to the 20 or 25 year requirement.

The current administration appears to continue to grant relief to many former students who are struggling with student loan debt. 

However, only time will tell if the administration takes further action with student loan debt relief and forgiveness. If more relief comes down from the federal government, then Hope Credit will help you through the process of maximizing your benefits in accordance with the revised guidelines.  These changes in government policy can benefit you by relieving your student loan debt immediately in some cases.

Call Hope Credit at (760) 916-9313 or email at support@hopecredit.net. You can also meet a representative at our physical office at 6375 S Pecos Rd #224 Las Vegas, NV 89120.