The Congress has created a spending plan of $350 million to help students under debt. This plan will, in particular, help those students who enrolled in the wrong repayment plan and therefore could not avail student loan forgiveness.
This plan will also ease the burden on the Public Student Loan Forgiveness program (PSLF) which was initiated in 2007 with the aim of attracting people to take up government and nonprofit jobs with the assurance that after 120 qualifying payments, the student loans would be forgiven.
2017 was the first time that students who took up the PSLF offer could apply for loan forgiveness. However, many applications were rejected because the employers didn’t qualify or the students had been participating in the wrong repayment plan. The catch in the whole plan was that only federal direct loans qualify and these need to be a part of an income-driven repayment plan. Graduated repayment plans and extended repayment plans are not allowed under the PSLF scheme.
The $350 million that the government has kept aside for students will address this issue. It will be available to those who chose to participate in the graduated or extended repayment plan. The loan forgiveness is being offered on a first come, first served basis and is available for as long as the $350 million last.
You will have to furnish proof that the repayments made by you under the incorrect plan are what you would’ve paid had you enrolled in the income-driven repayment plan. The latest monthly payment and the one made one year prior to applying for PSLF will serve as evidence for the Department of Education.
Make sure that you fill the Public Service Loan Forgiveness Employment Certification Form. This is to show that your employer qualifies under the conditions laid out for loan forgiveness. You will also have to fill out and submit the PSLF application form.