INDIANAPOLIS — Longstanding failures.
That's what the Department of Education said it's trying to fix when it comes to certain federal student loan programs.
The changes will affect some people who have federal loans, but more specifically income-driven repayment plans.
At the end of an income-driven repayment plan, which is 20 or 25 years depending on the type of debt, the remainder of the person's debt is forgiven.
While the intention might have been there, Anna Helhoski with NerdWallet said the plans weren't working when it came to counting payments or leading to forgiveness.
"Borrowers were often steered into costly forbearance programs when they could have been in an income-driven repayment plans, and other borrowers were just left out completely because they didn't have the right type of loan to qualify," Helhoski said.
You might be impacted if you meet one of these three conditions:
- Incorrectly steered into forbearance
- Missed out on forgiveness-qualifying payments because of your loan type
- Spent time in any kind of a deferment, except in school deferment, before 2013.
Helhoski said the fixes are expected to benefit millions of federal student loan borrowers this year and in years to come.
"That includes immediate debt cancellation for 40,000 borrowers through public service loan forgiveness, and then, thousands of borrowers with older loans are going to receive income driven repayment forgiveness as well," Helhoski said.
The U.S. government estimates more than 3.6 million borrowers are going to move at least three years closer to getting the income-driven repayment forgiveness.
All of this is supposed to be automatic, so you shouldn't have to do a thing.
This is different from the Public Service Loan Forgiveness changes, or the loan forgiveness program for public workers. To qualify for PSLF, you need an income-driven repayment plan.
To qualify for the PSLF changes, you need to fill out a temporary waiver by October 2022.
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