Last week, President Trump signed a $3.1 trillion spending bill. The bill included a one-time $350 million expansion for student loan borrowers seeking public service loan forgiveness (PSLF).
(For more details about PSLF in general, we wrote detailed articles here.)
Not much is known about the process yet, but here is what we know:
1- It’s a first-come, first served deal.
2- It's intended for those that mistakenly chose or were misled into the wrong repayment options thus not qualifying for PSLF.
Here is an example of who would qualify:
Mike began working for a non-profit hospital 10 years ago (the actual name has been changed to protect Mike's true identity). Mike chooses to go on an extended graduated repayment plan for 25 years.
He thought he would qualify to have his student loans forgiven after ten years because he works at a non-profit company. His loan servicers, which over the ten-year span changed multiple times, each reassured him that he would qualify.
When Mike submitted the paperwork for loan forgiveness after working for 10 years, he was told by the government that he doesn’t qualify because the student loan repayment plan he chose, the graduated repayment plan, does not qualify for loan forgiveness.
The $350 million is there to help Mike and others in similar situations.
Mike’s story also highlights two important points. First, make sure you are on the right repayment plan if you are going for loan forgiveness and second, don’t wait ten years to submit the paperwork.