Major changes to student loan issuance could be made this week.

You need to know – and what it means for your student loan.

Student Loans

First reported from NPR, the US Department of Education is expected to announce a major overhaul of the public credit program this week. The program, which helps public servants cancel student loans for their federal student loans, has been haunted by allegations of mismanagement, low approval rates, and widespread confusion among student loan borrowers. The main changes are expected to involve two main approaches:

1. Simplify student loan issuance: Simplify long-term student loan remission through the state rulemaking process; and
2. More forgiveness for student loans: Take advantage of executive action to make it easier for student loan borrowers to obtain student loan waiver by relaxing the rules and requirements retrospectively.

Student Loans: Problems with Student Loan Granting

Since Congress launched Public Service Loan Forgiveness in 2007, the program has faced numerous challenges that have confused student loan borrowers, including:

• what student loan payments count towards the granting of student loans;
• which Types of Student Loans should apply to student loan issuance;
• which employers qualify for student loan issuance;
• when paying for student loans start counting for student loan forgiveness;

Obtaining a student loan is not as easy as saying that you “work in the public sector” or have been doing so for 10 years. Student loan borrowers must work full-time (at least 30 hours per week) for a qualified public service or nonprofit employer, enroll in a qualified student loan repayment plan, make 120 monthly student loan payments, and at least the majority of those student loan payments while enrolled in an income-driven repayment plan are. (Student loan issuance won’t be available to everyone, but this plan is available now). With a 98% rejection rate, many student loan borrowers seeking public service loan waiver drowning in their student loan debt have invested in the public service for 10 years and still have not been able to obtain waiver of student loans. (Here’s how to get a student loan waiver).

Termination of the student loan: significant changes

Corresponding NPR, The Ministry of Education will make the following major changes:

1. Credit previous student loan payments against student loan issuance

If you have had previous student loan payments that you made for student loan issuance but were not counted, it is now possible to have those payments will counting. To count previous student loan payments, student loan borrowers must apply for public service loan waiver before October 31, 2022.

2. Count previous student loan payments for FFELP loans

This is one of the biggest problems in student loan forgiveness. If the Department of Education changes this rule, there may be some student loan relief for those borrowers who have had problems for years. (Here are 17 ways Biden can fix student loan forgiveness). Prior to 2010, FFELP student loans from financial institutions (not the Department of Education) were made as federal student loans. In the past, borrowers holding these student loans have struggled to include them in student loan waivers because the public service loan allocation program only applies to direct loans such as Stafford loans. While FFELP Loan Student Loans Borrowers can consolidate FFELP loans into a direct consolidation loan, their previous FFELP loan payments did not count towards the 120 monthly payments required. In fact, after consolidating to a direct loan, these student loan borrowers had to start over, even if they made 100 monthly payments, for example. Now the Department of Education can remove this rule and credit previous student loan payments, even for FFELP loans. If the Department of Education implements this rule change, it could be a determining factor in student loan forgiveness.

3. Get student loan forgiveness credit if you used an incorrect student loan repayment schedule

Unknown to some borrowers, only certain student loan repayment schedules are eligible for public service loan relief. For example, income-based repayment plans like IBR or REPAYE are two examples of eligible student loan repayment plans. A new rule change would provide a payment credit to all student loan borrowers who made student loan payments through an ineligible student loan repayment plan.

4. The student loan payments made prior to the student loan consolidation also count

Similar to the FFELP loans, some student loan borrowers decided to consolidate their federal student loans while seeking student loan forgiveness. The problem with this strategy is that your student loan payments made before the student loan consolidation may not count towards the required 120 monthly student loan payments. Under the rule change, previous student loan payments made prior to the student loan consolidation would now count towards the required student loan payments.

5. Military service members can count past student loan payments while on active duty

For all months that they have been on active duty, members of the military can have student loan payments offset against them, even if their student loan payments were temporarily due to a deferral or deferral of the student loan.

6. The granting of student loans can also be relaxed in these areas

In the long term, the Ministry of Education could relax certain rules, including:

• Broadening the definition of “public service” to qualify more student loan borrowers;
• Providing “credit” for payments even when student loan borrowers have failed to make student loan payments due to deferral, deferment or other financial difficulties;
• Establish a formal process for student loan borrowers who have been declined to receive a student loan to appeal their decision and correct errors; and
• Loans for student loans for borrowers who have paid late or in installments.

Student Loan Forgiveness: Final Thoughts

Student loans are changing, and this focus on student loan issuance is another example. That news comes after this week’s surprise announcement that Navient will cease serving federal student loans. (Here’s why Navient canceled your student loan). Until the Department of Education publishes formal changes or recommendations for student loan waivers, those changes may not be implemented. If the school makes these or other changes, expect the Department of Education or your student loan service provider to provide more details. It is clear that President Joe Biden is focused on improving student loan forgiveness and making student loan repayments easier so that more student loan borrowers can get financial relief. The Education Department, led by Secretary Miguel Cardona, has held hearings and solicited public comments for feedback on student loan forgiveness. The combined results of these efforts could help shape the future of student loan remission. In addition to executive action, student loan issuance has become a major congressional focus, even though Congress has not passed large student loan granting laws. It is also possible for Congress to act independently of the Biden administration to provide additional student loan facilitation for student loan borrowers.

Keep in mind that there are several ways to repay student loan. Regardless of whether student loan issuance is in your future, make sure you understand all of your student loan options. Here are some popular ways to save money on your student loan:

Student Loans: Related Literature

How to get approval for student loan issuance

These borrowers are not eligible for student loan waiver

Student loan relief won’t be available to everyone, but that plan is available now

How to get student loan issuance