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A Pause for the Public Service Loan Forgiveness Program


The Education Department has paused the processing of applications for student loan forgiveness by borrowers who work in public service jobs for about two months as it updates its systems and seeks to fix the problems plaguing its forgiveness program.

The pause for the Public Service Loan Forgiveness program began May 1, the department’s Office of Federal Student Aid said. Borrowers can still submit applications and all other forms, like those documenting their eligibility, but they won’t be processed until the pause ends in July, the office said.

As part of a long-planned effort, the Education Department is moving management of some aspects of the forgiveness program from a contractor’s website to a central dashboard on StudentAid.gov, the federal financial aid portal, so borrowers can easily get up-to-date information on their status, the department said. In a recent blog post, it called the changes “an exciting and necessary step” that would lead to faster reviews of applications.

During and after the pause, the 2.2 million borrowers working toward loan forgiveness in the public service program will continue to make loan payments on their assigned loan servicer’s website, the department said.

Millions began resuming regular payments on their federal student loans just months ago, after a three-year hiatus due to the pandemic.

Alpha S. Taylor, a staff attorney at the National Consumer Law Center, said that while some changes had been anticipated, the processing pause was unexpected. He said it was worrisome because some borrowers might have to delay making financial decisions until later this summer, after they get word on their eligibility for debt relief. Also, he said, a backlog may build up during the pause, causing more delay when the system starts up again.

“Borrowers are concerned,” Mr. Taylor said.

Created in 2007, the public service program allows borrowers who work full time in lower-paying government or nonprofit jobs, including teachers, firefighters and members of the military, to have their remaining federal student debt wiped out after making on-time payments for 10 years (120 payments). But the initiative’s complex rules and years of flawed management have long prevented most borrowers from erasing their loans.

Starting in 2021, the Biden administration took steps to reboot the program. The government, for instance, offered temporary waivers that gave borrowers credit for loan payments previously deemed ineligible, and more people began to see relief.

Debt relief granted through the program since October 2021 totaled $62.5 billion for 871,000 borrowers, the Education Department said in March. Previously, about 7,000 borrowers had received forgiveness since the program’s debut.

Now, a processing pause is needed while the department updates its “systems and contact centers to streamline and fully manage” the program through StudentAid.gov, the student aid office said. One benefit of the new arrangement, the agency said, is that students will no longer have to switch loan servicers when they enter the public service program as they often did in the past, reducing the chance of errors.

Previously, a single contractor — most recently the Missouri Higher Education Loan Authority, known as MOHELA — managed the program. As of May 1, the contractor no longer does, but it remains a regular servicer of federal student loans for millions of borrowers, according to another blog post. The contractor said the plan to move management of the forgiveness program to the federal website dated to 2022, before it became the manager.

Separately, the contractor said in an email that it had recommended moving “a small portion” of its borrower accounts to different loan servicers to meet the government’s time frame for system improvements this summer. “We are in communication with these borrowers and are working diligently to ensure a smooth transition of their loans,” it said.

It also said any reports “about this move being related to some sort of penalty or disciplinary action against MOHELA are totally and completely false.” The contractor’s performance has come under scrutiny from the Education Department, members of Congress and advocates for borrowers, who contend it mishandled borrower inquiries and calculated inaccurate loan payments.

Persis Yu, deputy executive director of the Student Borrower Protection Center, an advocacy group that has been critical of the contractor, said the government had suggested on its website that borrowers take screenshots of their account information on the contractor’s website before the pause, a move that she said she found “absurd and unreasonable.”

“It sends a pretty strong signal that ‘we anticipate problems,’” she added.

The department, in an email, said screenshots were “beneficial” because borrowers would be unable to see their payment count or other program information during the processing pause. The student aid office will securely transfer data and test systems to make sure the program runs smoothly when the pause ends, the department said.

Concerns about technology management at the Education Department have been heightened by the troubled rollout of the new version of the financial aid form known as the FAFSA, for Free Application for Student Financial Aid. A major overhaul meant to simplify the form and make aid available to more students hit numerous snags, delaying the ability of students to see how much financial aid they might get for college this fall.

Here are some questions and answers about the loan forgiveness program and student loan servicing:

The Education Department said that it would begin reviewing forms as soon as the transition was complete, and that borrowers would be notified by email once their form was processed. Any qualifying payments made during the pause will be applied after the pause ends in July, the department said.

Ms. Yu advised keeping copies of any records you have, and of any forms you submit during the pause.

Borrowers who qualify for forgiveness during the pause can request a forbearance — a temporary postponement of payments — from their loan servicer, the department said. Any “extra” payments will be refunded to the borrower or applied to other student loans that aren’t part of the public service program, the department said.

Mr. Taylor recommended that borrowers request a forbearance if they were “confident” that they had made the required 120 qualifying payments. (Servicers will still be able to perform basic functions, he said, like accepting payments and processing forbearance requests.) If borrowers are not absolutely sure, he said, “it’s safer to err on the side of caution” and keep making payments if they can afford to, knowing that any extra payments will be refunded.

Because the public service program is complicated, and there have been so many problems with its administration over the years, “few borrowers know with confidence” that their loans will be canceled, Ms. Yu said. And while borrowers are entitled to a refund if they keep making payments after they qualify for relief, she said, “many borrowers have told us that they have had trouble getting their refunds.”

Yes. The pause also affects the Teacher Education Assistance for College and Higher Education program, or TEACH, which provides grants for students who agree to teach in low-income or high-need schools. If they don’t complete the service requirement, the grant becomes a loan that must be repaid. A pause on this program also began May 1 but will continue until the fall, the student aid office said.



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