Borrowers start to feel relief from loans recently forgiven under PSLF
Borrowers who’ve worked in public service, made 10 years of payments on their federal student loans and have applied for Public Service Loan Forgiveness (PSLF) have started receiving it. NASFAA News Today reported that the U.S. Department of Education’s (ED's) recent, temporary, PSLF changes are working. They’ve provided roughly 30,000 borrowers with student loan forgiveness relief. Although not all borrowers will pursue or are eligible for PSLF, these increases in PSLF forgiveness are a step in a positive direction for those that have applied. However, they represent less than one-tenth of 1% of the total population of 43 million student loan borrowers.
A letter to public service workers from Richard Cordray, chief operating officer of Federal Student Aid (FSA), asked for patience as they move forward with the magnitude of changes that require “large-scale data and processing work… .” He pledged to get program changes made, but acknowledged that addressing more than a million borrower accounts will be difficult.
Help raise awareness in the countdown to federal student loan repayment
After almost two years, Jan. 31, 2022 will signify the end of the federal student loan repayment and interest accrual suspension under the COVID-19 emergency relief fund. FSA’s strategy to help borrowers make the transition to begin repayment includes a series of email communications, general awareness campaigns on social media and outreach through various organizations (e.g., financial aid offices, alumni associations, labor unions, professional organizations, etc.). FSA created an outreach resource toolkit and Cordray is asking organizations to help spread the word to borrowers.
Given the state of change underfoot, it’s also a good reminder for borrowers to be vigilant of scammers. According to FSA, “A number of offers for financial aid or help (such as a “pandemic grant” or “Biden loan forgiveness”) have circulated during the coronavirus pandemic.” Borrowers can learn how to protect themselves at FSA’s Avoiding Student Aid Scams.
Attend our free SmartSessions® webinar, The Great Repayment Restart, to learn more about the important details borrowers should know about the payment restart.
Private student loan debt reaches all-time high
Student loans come in a variety of types, but one main determining factor is whether they’re funded by the federal government or by private lenders like banks and credit unions. The Institute for College Access and Success’ (TICAS’) annual report shares that the areas with the highest and lowest average overall student loan debt at graduation in 2020 are concentrated in the Northeast (e.g., New Hampshire at $39,928) versus the West (e.g., Utah at $18,344).
The report also estimates total private student loan debt from four-year public and private nonprofit colleges grew 47% from 2014 to 2021. Private student loans can fill funding gaps to pay for college, but they lack many of the student-friendly safeguards inherent to the federal student loan program (e.g., subsidies, income-driven repayment options, loan postponement, loan forgiveness options, etc.). TICAS reports over 50% of undergraduate private loan borrowers haven’t maxed out the federal student loans available to them.
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