Time is Running Out for Student Loan Servicers to help

Student Loan Servicers

Student Loan Servicers

Student Loan Servicers The Public Service Loan Forgiveness (PSLF) program was established in 2007 by Congress to reward and inspire individuals to labor for the public good, including in the armed forces.

Borrowers in the military have been complaining to the Consumer Financial Protection Bureau (CFPB) for years about poor student loan servicing processes that have prevented them from receiving PSLF payments.

Furthermore, the GAO stated that in 2020, despite the fact that 176,906 active-duty servicemembers possessed federal loans eligible for the PSLF program or that could be combined into eligible loans, only 124 servicemembers had actually obtained debt forgiveness through PSLF.

In order to ensure that as many people as possible can take advantage of PSLF, the Department of Education made a series of sweeping announcements in October 2021. Payments that were previously ineligible for forgiveness are now available to public servants, including military personnel.

When a service member enrolls in the Direct Plus program, the Department of Education will know immediately which of them are eligible for additional benefits since they already have Direct Loans. But before applying for PSLF, servicemembers holding Perkins or Federal Family Education Loans (FFEL) must combine those loans into Direct Consolidation Loans. Also, they need to have all of this done by October 31, 2022, to reap the benefits.

There might be thousands of eligible military members if the proper documentation is presented on time. However, this can only be achieved if servicemembers get adequate guidance and assistance from their student loan servicer. Because of the importance of properly identifying military borrowers and giving them the PSLF credit they are due, servicers must use all available means to do so.

Servicers can easily connect with active-duty military personnel since they are already obligated to identify borrowers who are eligible for protections under the Servicemembers Civil Relief Act (SCRA). For those borrowers in the military who hold Federal Family Education Loans or Federal Perkins Loans and would benefit from merging into

Direct Consolidation Loans in order to be eligible for PSLF, servicers can use the data at their disposal to identify these borrowers. Servicers can then educate these borrowers about the PSLF Waiver and its advantages, and follow up with any assistance they may need to actually get those benefits.

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