Student Loan News
This morning, the Department of Education announced new improvements to the Public Service Loan Forgiveness program to restore the promise of PSLF. For distilled information about the changes, check out this handy Consumer Protection Guide by the Berkeley Center for Consumer Law and Economic Justice for FAQs on this topic, or our Google Doc.
The Dep’t of Ed is calling the new improvement a “Limited Waiver Opportunity.” Made under the Department’s executive authority during an emergency, the waiver will be in place until October 31, 2022. The waiver will allow borrowers to receive PSLF credit for all payments made while working full-time for a PSLF-qualifying employer, regardless of federal loan type or payment plan. This includes loan types and repayment plans that were previously not eligible for PSLF, and payments that were late or not made in the full amount due.
The waiver alone will benefit over 550,000 borrowers. An estimated 22,000 borrowers will be eligible to have their loans immediately discharged through PSLF, and another 27,000 borrowers could potentially be immediately eligible for PSLF if they certify additional periods of employment. Around 60% of borrowers who submit PSLF Forms have ineligible FFEL loans–this waiver will help those borrowers become eligible.
FedLoan Servicing, Granite State Management & Resources, and Navient recently announced they will not renew their contracts with the Department of Education. If your loans are managed by one of these servicers, they will be transferred to a different servicer by the end of the year.
If your servicer is FedLoan Servicing, your loans will be transferred to MOHELA. If your servicer is GSMR, your loans will be transferred to Edfinancial. And if your servicer is Navient, your loans will be transferred to Maximus / Aidvantage.
To prepare for the transition:
- Update your contact information now so you can receive emails and letters about the transition to the correct address.
- Download and save everything you can from your loan servicer’s website–payment histories, billing statements, income-driven repayment plan documents, PSLF/Employer Verification Form acceptances and approvals, notices about the federal forbearance, etc.–before the transfer occurs. Keep all of those documents saved for your PSLF records. Some borrowers have had problems after previous transfers, with new loan servicers claiming some payments didn’t count toward PSLF. You’ll want to make sure you have proof of all your payments so you’re able to refute any claims like that if they arise.
- Take note of your loan balance at the time of the transfer. Once your transfer is complete, make sure the loan balance is correct.
- Your existing repayment plan should transfer over with your loans, but make sure your monthly payment amount is correct after the transfer is complete.
On August 19, 2021, the Department of Education announced that it was automatically discharging student loan debt for some borrowers with a total and permanent disability (TPD). Borrower identification will occur through a matching program with the Social Security Administration. The discharge is expected to affect over 323,000 borrowers and discharge over $5.8 billion in student debt.
On August 6, 2021, the Department of Education announced the “final” extension of the student loan forbearance and 0% interest rate through January 31, 2022.
With only a few months of the forbearance to go, we’ve put together some FAQs to make the transition and the LRAP application process easier. If you can’t find an answer to your question there or by reaching out to your loan servicer, email us at firstname.lastname@example.org or make an appointment.
For more information about the forbearance, review our COVID-19 and Student Loans webpage.
One of Berkeley Law’s defining characteristics is its public mission and commitment to supporting our students and graduates pursuing careers in public service. Our Loan Repayment Assistance Program is crucial in this regard. We are pleased to announce a programmatic change to Berkeley Law’s Loan Repayment Assistance Program to make it more generous for our graduates. Effective August 1, 2021, LRAP’s out-of-pocket contribution income threshold will increase from $70,000 to $80,000. In short, this change will allow more graduates to receive a greater amount of LRAP support, consistent with Berkeley Law’s commitment to public interest and public service graduates.
Starting August 1, LRAP will cover 100% of all eligible loan payments for LRAP participants with annualized full-time incomes of $80,000 or less. For participants making over $80,000, LRAP assistance will be prorated, with participants expected to make an out-of-pocket contribution equal to 35% of their marginal income above $80,000. As a result, more participants will be able to have 100% of their eligible loan payments covered, and more participants with incomes above $80,000 will be eligible for LRAP support with a smaller out-of-pocket contribution.
To calculate your LRAP eligibility, use our LRAP Calculator.