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Lots Of Eligible People Don't Know Their Student Loans Qualify For Public Service Loan Forgiveness

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With just a few months left before the government's expanded public service loan forgiveness program for student debt is set to expire, state and local leaders and student advocates in California are making a push to get more people signed up.

"We gotta make sure every single county employee and those that contract with us and work with us know that this opportunity is available to them," Los Angeles County Supervisor Hilda Solís said in a webinar on Monday announcing the campaign, which is dubbed the California Student Debt Challenge.

The Public Service Loan Forgiveness (PSLF) program offers student debt relief to borrowers who complete 10 years of loan payments while working in public service or for a qualifying 501(c)(3) nonprofit organization.

Gov. Gavin Newsom said some 800,000 Californians likely qualify for PSLF. But according to Rich Cordray, chief operating officer of Federal Student Aid, fewer than 15,000 Californians have actually had their loans forgiven thus far.

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The new campaign seeks to get public service and nonprofit employers to help spread information about the programs to employees who may qualify for loan forgiveness.

"We want every Californian who deserves this key financial relief to know about it and to get it," Cordray said.

Leaders of the Campaign for California Borrowers' Rights say many people don't know they qualify for the program, which is open to all full-time government employees, and nonprofit workers in the areas of emergency management, early childhood education, public interest law, public education and public health, among others.

The program has also been notoriously difficult to access since it launched in 2007, in part because of strict qualifications. As part of President Joe Biden's pledge to relieve student debt, the U.S. Department of Education retroactively loosened restrictions on which types of payments and loans qualify under PSLF.

The changes include:

  • Allowing borrowers to count payments on loans that previously did not qualify for PSLF, including Federal Perkins Loans and Federal Family Education Loans, toward loan forgiveness. But those with Perkins or FFEL Loans, or other federal student loans, need to consolidate them into a direct consolidation loan to qualify for PSLF.
  • Counting public service toward loan forgiveness regardless of whether or not the borrower made a payment, or made it on time, or made it under a qualifying payment plan.
  • Allowing forbearance periods of 12 consecutive months or greater or 36 cumulative months or greater toward PSLF. 
  • Counting deferment due to economic hardship toward PSLF if claimed on or after Jan. 1, 2013, and any deferment claimed before 2013. 

But the temporary waiver expires at the end of October. (Not to be confused with the temporary hold on repaying student loans in general, which expires August 31, pending another extension.)

Natalia Abrams, president and founder of the Student Debt Crisis Center, said student advocates are lobbying the federal government to extend the waiver. "It's a tall order to find all these public service workers [who qualify]," she said. Meanwhile, the deadline has given hers and other groups "a sense of urgency" to expand awareness of PSLF among public service workers.

Employers Asked To Step Up Messaging

The campaign is urging government employers and nonprofits to send emails and post information about the PSLF program to their employees.

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Leaders are relying on employers "to be the trusted messenger, so that we can find as many borrowers as possible," Abrams said.

Local governments and state departments that have already signed up to help spread the word among their employees include the state Department of Justice, the cities of Azusa and South Pasadena, and the city and county of San Francisco.

The California Association of Nonprofits is hosting webinars for employers about the program and how to submit work certification for employees to the federal government. CEO Jan Masaoka said there are almost 200,000 nonprofit employees in California with student debt.

"PSLF not only helps our employees but it helps nonprofits keep the qualified staff that we need to serve our communities," Masaoka said. She also encouraged nonprofits who work in areas that qualify under PSLF to post that in job descriptions in order to attract employees.

Christine Shea, a therapist who has worked for nonprofit organizations in the area of mental health, said she has more than $180,000 in student debt after completing her master's degree. She said some of her past loan repayments didn't qualify for the PSLF program until the new waiver went into effect.

"I was pretty discouraged by that," she said. "I'm really hoping that this can get straightened out and I can get back on track and hopefully see these loans forgiven."

She said many of the nonprofits she had worked for didn't know about PSLF.

"It was really left up to me to explain the paperwork to others and to get the word out to my coworkers," Shea said.

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