Borrowers Stuck Awaiting Public Services Loan Forgiveness

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After a decade of painstaking tracking of student loan payments, some borrowers on the verge of loan forgiveness have found themselves in a brutal final stage: the waiting period.

Borrowers participating in the government service loan forgiveness program report waiting up to six months for their forgiveness applications to be approved, often without explanation. Despite loan payments are suspended As for tackling the pandemic, borrowers are still worried about whether their approvals will be processed before repayments in October. What’s more, they face the stress of knowing that changing their employment status can turn over years of rigorous preparation.

Data released by the Ministry of Education last week show a paperwork backlog of around 147,000 forms – although the agency did not disclose a breakdown of how many applications were from borrowers who made the required number of payments for forgiveness, compared to those from those. still in the process, which present annual updates. The Department of Education did not respond to questions about the delay.

The Public Service Loan Forgiveness, often referred to as PSLF, was created to offer loan relief for borrowers who spend at least ten years working in low-paying government or non-profit positions. Borrowers must make 120 qualifying monthly payments before receiving their loans canceled

Amy Kokuzza hit 120 in January after years of diligently monitoring her progress. She decided it was a simple case: she worked as a lawyer for a federal agency for 10 years and in recent years has filed annual employment certificates that showed that she made the required number of payments.

Therefore, when she applied, she had no reason to believe that she would be refused. But as the weeks turned into months without a word, her anxiety grew. She started checking her account five, six, then seven times a day. In the end, there was a lot at stake. She has planned her entire career and financial life around this promise.

“It just disappears into the void,” she says. “There is no transparency. No connection. You just don’t hear anything for months and months. And you start to think: “Oh, did I somehow miscalculate?”

In the nearly four years since the first borrowers were eligible for forgiveness through PSLF, the program has received reputation for bureaucratic disorder… There are widespread stories of service companies not recording payments correctly or borrowers receiving conflicting information about whether their employer is eligible for the program. Bounce rate remains highso that even borrowers who say they have checked their eligibility three times cannot ignore the lingering doubts that their loans will not actually be forgiven when they are in the final stages of waiting.

The delay can cause enormous moral damage to individual borrowers as they sit and wait for months, says Seth Frothman, executive director of the Student Borrower Advocacy Center.

“This is just another insult to borrowers in this system,” he says. His organization is especially concerned if government includes payments before the backlog of forms is considered.

In some cases, more than just the discomfort of waiting is at stake. The program stipulates that borrowers not only make 120 matching payments while working for a suitable employer, but that they are still working for a suitable employer at the time their loans are forgiven.

This demand exacerbated expectations for Melissa Pennis of Rochester, NY. She asked for forgiveness in January. She works in public health for a non-profit organization, and like most non-profit organizations, resources can vary depending on funding from year to year. What if her job had been fired when this year’s budget was set in April?

Fortunately, this did not happen. And she logged in last week and found that her $ 104,000 balance had been canceled.

Borrowers eligible for government loan forgiveness face huge delays in paying student debt, she said. “But there is nothing you can do until these loans run out.”

Over the past few years, FedLoan, the support staff hired by the government to run the government service loan forgiveness program, has become much better at providing borrowers with up-to-date information on their progress in loan forgiveness, Pennis said. But once she applied, it became much more difficult to get answers. (FedLoan has forwarded questions about pardon waiting times to the Department of Education’s Federal Student Aid Bureau.)

Borrowers like Pennise steel Reddit, Facebook and Twitter to share stories of what to expect in the absence of additional official information.

It’s not just people at the end of the road that face delays. Borrowers who are trying to prove their employment or receive an update on how many qualifying payments they have made, report such delays

Arthur DeVore III submitted documents to confirm his employer in December. He’s still waiting. He also has private loans, so every month when he pays off the private loans, he calls to check the status of his certificate of employment at PSLF. He serves on the New York City Equal Employment Commission. This is a local government agency, so it should be trivial.

“I’m disappointed because it shouldn’t take that long,” he says. “What’s your extreme review process that takes seven months?”

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Under normal circumstances, it usually takes 45 to 90 days to receive the final loan forgiveness notice under the Public Service Loan Forgiveness, according to Betsy Mayotte, founder of the Student Loan Advisers Institute, which offers borrowers free advice on student loan repayment. The timeline is definitely longer than now, she said, likely due to disruptions caused by the pandemic.

She expects the timeline to be cut again over the next few months. And the government has created a new tool to help speed up the process of confirmation of employment if your employer is already on the system as approved for the PSLF. Mayotte says that, oddly enough, borrowers who have used the tool seem to report much shorter time frames than people who manually submit their paperwork.

In the meantime, one simple improvement would be to provide borrowers with clearer information on when to apply for forgiveness.

“Even if the timeline isn’t perfect, at least it sets expectations,” Mayotte says. Right now, instead, some borrowers are reporting that customer service representatives say they are not allowed to provide any deadlines. Thus, people are constantly asking for updates or submitting multiple applications, which, according to Mayotte, only further clogs the system.

This indicates what Kokuzza went through. When she first applied and asked for a schedule, she remembers being told it could take two or three months. But on subsequent calls to FedLoan, she received conflicting responses.

“I believe you could probably call three times a day and find out three different stories about what’s going on with your application,” she says.

Despite these challenges, Cocuzza is a success story. Last week, 154 days later, she logged in after lunch — the second check of the day — and found that her application had finally been processed. The loan balance fell from $ 227,609 to $ 0.

“When I realized that the loans were nullified, I just cried.”

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