The Consumer Financial Protection Bureau (CFPB) released a bulletin on July 26 warning service members that time is expiring for loan officers to assist with student loan debt relief.
Let’s unpack that. Although there are benefits in place to help service members with education costs, at times this may not be enough or may be exhausted. Similar to civilians, student loan debt can be common in the service member community. For more than a decade, CFPB has received complaints from service members about student loan processing and unique barriers in the benefits process. To overcome challenges, they have been working toward making the necessary changes to help alleviate some of the barriers.
In 2007, Congress created the Public Service Loan Forgiveness (PSLF) program. It encouraged citizens to serve their communities and their country through public interest work—including military service. In 2020, the US Government Accountability Office (GAO) reported that 176,906 active duty service members had federal loans eligible for the PSLF program or that could be consolidated into eligible loans, but that only 124 service members had received loan forgiveness under PSLF. That’s not even 1% of the people eligible for this program! The following year the US Department of Education took the initiative to help get more people involved in the program. When DOE announced sweeping action, it adjusted the time limitations that restricted some members from leveraging the waiver. During this time, they announced that service members who may not have qualified under the old rules could submit retro-dated waiver applications. The Department of Education states, “Now, for a limited time, borrowers may receive credit for past periods of repayment that would otherwise not qualify for PSLF.”
Service members who already have Direct Loans will automatically be identified by the Department of Education to receive benefits service if they have applied and qualified, but military members with Perkins or Federal Family Education Loans (FFEL) must consolidate those loans into Direct Consolidation Loans before submitting their PSLF applications. In order to benefit, they must take these steps by Oct. 31, 2022, according to the CFPB.
For service members to leverage this program and take advantage of loan forgiveness benefits, it is vital that they connect with a loan service provider/officer to review their eligibility and gather the information needed to submit the proper documentation. These individuals can identify benefits and eligibility for loan debt forgiveness. With the changes to this waiver, tens of thousands of service members may be eligible in addition to almost 200k identified early for student loan debt relief. If you were denied or not qualified in the past, the new rule changes might make you eligible.
READY TO TAKE ACTION?
If you are a service member with student loans or even a family member of a service member with student loans, it’s imperative that you take action to leverage the benefits that you are entitled to while the window of opportunity and exceptions is open. Processing loan/bank paperwork and federal forms can be an extended and complicated process, especially if you have faced barriers or challenges in the past. FSA and its partners have attempted to ease this process with digital tools and online applications. There are several steps in this process, depending on your circumstances.
If you are a military borrower with Federal Family Education Loans or a Federal Perkins Loan:
Start the process by consolidating your loans into a Federal Direct Consolidation Loan. More information about consolidation can be found through FSA. A Direct Consolidation Loan allows you to consolidate multiple federal education loans into one loan at no cost to you. The entire loan consolidation process must be completed in a single session. Most people complete the process in less than 30 minutes.
What do you need?
- Verified FSA ID
- Personal Information
- Financial Information
Visit https://studentaid.gov/app/launchConsolidation.action to begin the consultation process. FSA also provides a demo to help walk you through the process. You may want to contact your loan provider to assist you with the documentation or information needed to complete this step.
Once you have completed your consolidation, or if you do not need to consolidate, you must submit a PSLF application by Oct. 31, 2022. Review the qualifications and information available through the resources provided below.
- You can use the PSLF Help Tool to assist you in starting the PSLF form. Once you enter your information, you’ll be able to print the partially completed form for you and your employer to sign.
- Or, you can download the PSLF form and complete all sections on your own before submitting it.
You can learn more about the process and program at the Department of Education’s website. We recommend visiting and reviewing the PSLF Guide provided by The Consumer Financial Protection Bureau (CFPB) to help familiarize yourself with qualifications and more information.
Don’t be afraid to speak up if your student loan servicer is not giving you the information and support you need to benefit under the new PSLF rules. You can submit a complaint through the CFPB. Its goal is to ensure individuals’ rights are not being violated.
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