NEW JERSEY — Gov. Phil Murphy and federal officials gathered at The College of New Jersey on Monday to highlight a one-time pandemic-era waiver that allows public service employees to discharge their federal student debt against their years of full-time employment.
During the visit to the Ewing college, Murphy spotlighted the federally created Public Service Loan Forgiveness program targeted at public service employees and encouraged more to apply and benefit from it.
”The cost of college loans is one of the starkest examples of the affordability challenge more broadly facing our state and nation,” Murphy said, calling the program “a hidden gem.”
The one-time waiver will allow anyone who has worked full time in an eligible public service job since October 2007 to qualify for loan forgiveness. That includes people who did not previously qualify, Murphy said.
More than 2,500 state residents have now had $167 million in debt canceled at an average waiver of over $65,000 per person, Murphy said. About 31,000 New Jersey residents are enrolled in the main Public Service Loan Forgiveness program.
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Murphy and federal officials encouraged teachers and nurses to apply to the program, created in recognition of the extraordinary risks and responsibilities public employees took during the COVID-19 public health emergency, before the October deadline.
The Biden administration overhauled the Public Service Loan Forgiveness program in October. For years, thousands of borrowers had applied for forgiveness under the program, but nearly all of them were rejected by the federal government.
College students and public employees participated in the discussion with the governor, U.S. Undersecretary of Education James Kvaal and Federal Student Aid Chief Operating Officer Richard Cordray.
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The public meeting at the college comes amid speculation that President Joe Biden will use his executive authority to cancel some amount of federal student debt, and months before the November midterm elections.
In April, Biden said he would have an answer about student debt forgiveness after a “hard look” at additional debt forgiveness. Biden promised during his run for the presidency to cancel $10,000 in debt per borrower. He also has said reforming federal student loan debt would be a priority for his administration.
Erasing federal student debt for public employees — including public school teachers — is a priority, Biden has said.
New Jersey is exploring options to streamline the federal program for its 61,000 state employees, Murphy said. One of those avenues is automatically enrolling them in the program, as a way of increasing participation.
Public employees can refinance their private loans into the federal program to qualify for the loan forgiveness program.
Who is eligible for student loan forgiveness?
The government had restricted eligibility for the Public Service Loan Forgiveness program to certain types of federal student loans and specific repayment plans.
But through October 2022, borrowers who have made 10 years’ worth of payments while in qualifying jobs — such as in federal, state or local governments, nonprofit organizations or the U.S. military — will now be eligible for loan relief no matter what kind of federal loan or repayment plan they have.
Past loan payments that were ineligible before will now count, moving some borrowers closer to forgiveness. That is expected to be especially helpful to those borrowers with Federal Family Education Loans.
Among other changes, the department will allow military members to count time on active duty toward the 10 years, even if they put a pause on making their payments during that time.
How do I figure out if my past or current employer qualifies for PSLF?
Use this help tool of the Federal Student Aid website to check if you work for a qualifying employer: studentaid.gov/pslf.
It provides information on which employers meet requirements for the Public Service Loan Forgiveness program.
How do I check which federal loans I have?
If borrowers are unsure about what type of loan they have, they can request that information from their loan servicer or they can check on the federal government’s website for financial aid, said Betsy Mayotte, president of the Institute of Student Loan Advisors.
If you don’t know what kind of federal loans you have, you can see by logging into your account on StudentAid.gov, going to the My Aid page and scrolling down to the Loan Breakdown section.
If I qualify, what steps do I need to take?
Changes to the loan forgiveness program will take place in two parts.
The agency will first loosen some of the rules that had prevented eligible borrowers from discharging their loans, via a limited waiver. The government, for example, will allow payments on any of a person’s loans to count toward the total number required for forgiveness.
The Public Service Loan Forgiveness waiver will be available to borrowers who have direct loans, Federal Family Education Loans and Perkins Loans.
Parent PLUS loans not eligible under the limited waiver
The department said it would automatically credit borrowers who already have direct loans and have proved they work in an eligible field. Others who haven’t enrolled in the program or have ineligible federal loans will have to apply for forgiveness, which may require them to consolidate their loans. Borrowers will have until October 2022 to apply.
To find out more about loan consolidation, visit https://studentaid.gov/manage-loans/consolidation.
The Education Department also plans to review all Public Service Loan Forgiveness applications that had been denied and to give federal employees automatic credit toward forgiveness.
Other changes will come about more slowly via regulations created by “rule-making,” a lengthy and complicated bureaucratic back-and-forth between the government and other stakeholders.
For more information, visit StudentAid.gov/PSLFWaiver.
This article contains material from USA TODAY.
Mary Ann Koruth covers education for NorthJersey.com. To get unlimited access to the latest news about New Jersey’s schools and how it affects your children, please subscribe or activate your digital account today.