by Shari Finnell, editor/writer, Not-for-profit News
With tuition averaging $40,000 for private colleges and up to $28,000 at public colleges, the prospect of having student loan debt forgiven under federal government programs can be enticing. And with the pandemic moratorium for repaying federal student loan debt set to expire on May 1, questions on how to get some relief are steadily emerging.
You may be wondering, Am I eligible for student loan forgiveness? Is it worth the trouble of applying if I’ve been turned down before? Should I pursue a degree and work in public service — especially if I have a chance of my loans being canceled in the future?
And for those who are considering a degree at the undergraduate or graduate level, the rising costs of tuition — which is outpacing inflation by 28 percent in some cases, according to the National Center for Education Statistics — may act as a deterrent to starting the college application process.
These are the types of questions and situation that recently have been fielded by INvestEd, a nonprofit that helps Indiana residents discover avenues to pay for the expenses of a higher education, especially in the wake of the recent overhaul of the Public Service Loan Forgiveness (PSLF) program which erased an additional $6.2 billion in student loan debt, according to William Wozniak, vice president of marketing for the organization.
Wozniak said now is a good time for Indiana residents to be hopeful about qualifying for student loan forgiveness under the revised PSLF program, as well as the affordability of college — despite statistics that seem to indicate otherwise.
INvestEd, which has been providing students and their families with solutions for a college education for more than 40 years, said that people who may have been turned down for student loan forgiveness under PSLF for various reasons, including missed payments on loans or an employer being determined ineligible, Wozniak said.
Because of previous restrictions, the PSLF, which was introduced in 2007, only a small percentage of students had their loans forgiven, he added. The program was designed to incentivize more students to pursue careers in public service instead of positions in the more lucrative private sector. However, until recently, there hadn’t been any significant dent in the number of students who had loans forgiven under the program.
“Even if you were told you’re not eligible, now is the time to go back,” Wozniak said. “We can’t say in every case, you’re going to be in the clear and everything’s going to be OK but you can get advice on what you can do to still be on track to get your loan forgiven. The answer may have changed even if you were told a year ago that you were ineligible.”
Wozniak also said that many prospective students and their families often mistakenly assume that they don’t qualify for Federal Student Aid (FAFSA) because of their household income. And despite the headlines that point out that college tuition rates are soaring, the overall cost of attending college is declining because of an increase in the amount of grant assistance students can qualify for, he added.
Highlights of the revised PSLF
Under the PSLF, a person may be able to have their federal student loan debt canceled if they:
- Work full-time for an eligible public service or non-profit employer
- Enroll in an income-driven repayment plan
- Make at least 120 monthly student loan payments. Some participants may have had their payments deemed ineligible. If this is the case, they can apply for a limited waiver for student loan forgiveness through the U.S. Department of Education. The deadline to apply for the waiver is Oct. 31. It’s important to submit an Employer Certification to the U.S. Department of Education each year, and with each change of employer.
- For those who have FFEL, Perkins, or other federal student loans, consolidate your loans into a Direct Consolidation Loan to qualify for PSLF both in general and under the waiver. Before consolidating, confirm if the employer qualifies for the program.
- Past periods of repayment will now count regardless of whether a person made a payment, made that payment on time, for the full amount due, on a qualifying repayment plan.
- Periods of deferment or forbearance, and periods of default, continue to not qualify.
For more information about PSLF, go to the federal government site.
You can also contact INvestEd for a free consultation. INvestED consultants also can be reached at (317) 715-9007.
Common challenges facing students, loans and college tuition
In consulting with students and families, INvestED has come across numerous challenges they have faced in handling student loan debt, according to Wozniak. They include:
- Using private loans with high interest rates. In some cases, families are paying interest rates of 10 percent or more for years, Wozniak pointed out. “There are some people who might have $40,000 or $50,000 debt on the federal side, but they might have as much as that or more in private loans,” he said. “And even if the federal government were to wipe away all the federal loans, if they didn’t do the private loans as well, people are still paying 10, 11 or 12 percent on loans, waiting for federal forgiveness that may or may not come.”
- Unexpected changes in the PSLF eligibility rules. In some cases, even with adherence to the rules, students have encountered unexpected changes that made them ineligible for federal debt forgiveness.“ For years, we would talk to students and their families about making sure you’re current with your payments, and that your job is acceptable for the program so that you’re in position (for loan forgiveness),” Wozniak said. “Some people may have been working at an employer, and then in the seventh or eighth year of their employment, the employer was then deemed not acceptable. It wasn’t their fault. For whatever reason the department made that ruling.” If this has happened to you in the past, Wozniak said, recent revisions to PSLF could make you eligible for the program once again.
- Missed loan payments. Under PSLF restrictions, students were considered ineligible for the program if they missed loan payments. Those rules have been relaxed, according to Wozniak. “When we get to the pandemic, there was a realization that almost nobody was getting anything forgiven,” he said. “At that point, adjustments started to be made to the program.” Wozniak said they have advised students to return to the program even if they had been told they were not eligible because of missed loan payments.
Overall cost of attending college
INvestED also has a mission to educate students and their families about the overall cost of attending college and the grant assistance that may be available to them, according to Wozniak.
He said it’s important to distinguish between the sticker price and the net cost. Media outlets often will highlight the cost of attending college but will less likely feature articles about the net cost of attending college — after grant funds have been applied.
INvestED counselors advise students to apply to different colleges to determine that net cost. In some cases, the institution with the highest tuition may actually have the lowest overall cost after grant dollars have been added into the equation, he said.
“When we work with families, they’re pleasantly surprised when they find out that Mary or Johnny can go to school for $15,000 net. We look at the actual net cost for that student,” Wozniak added. “With the proper advanced research, students can save a lot of money, which often means a lot less in student loans.”