After a decade of meticulously tracking student loan payments, some borrowers are on the cusp of loan relief in a cruel final stage: the waiting period.
Borrowers under the Public Service Loan Program have reported waiting up to six months for their applications for forgiveness to be approved, often for no reason. Even with loan payments on hold to ease the pandemic, borrowers are still concerned about whether their approval will be processed before payments resume in October. In addition, they are under the stress of knowing that changing their employment status could ruin years of careful preparation.
Data released by the Education Department last week shows paperwork of roughly 147,000 forms – although the agency did not release the breakdown of how many of them were requests from borrowers that made the required number of payments for forgiveness versus requests from. Those who are still in progress and who submit annual updates have done. The Ministry of Education did not respond to questions about the delay.
Public Service Loan Forgiveness, often referred to as PSLF, was created to provide credit relief to borrowers who have worked in often low-paying government or nonprofit jobs for at least a decade. Borrowers are required to make 120 qualifying monthly payments before their loans are canceled.
Amy Cocuzza hit that 120 mark in January after years of carefully monitoring her progress. She thought her case was a simple one: she had worked as a lawyer for a federal agency for 10 years and had filed annual employment certificate forms in recent years showing that she had made the required number of payments.
So when she submitted her application, she had no reason to believe that she would be rejected. But as wordless weeks turned into months, her fear grew. She started checking her account five, six, and then seven times a day. After all, there was a lot at stake. She had planned her entire professional and financial life around this promise.
“It just disappears into nowhere,” she says. “There is no transparency. There is no communication. You just don’t hear anything for months. And you start to think: ‘Oh oh, have I made a mistake?’ “
In the nearly four years since PSLF first waived borrowers, the program has earned a reputation for being a bureaucratic mess. Stories of service providers miscalculating payments or borrowers receiving conflicting information about whether their employer is eligible for the program are common. Rejection rates remain high so even borrowers who say they have triple checked their creditworthiness cannot ignore lingering doubts that their loans will not actually be granted in this final stage of the wait.
The delay can take a huge mental toll on individual borrowers as they wait and wait for months, says Seth Frotman, executive director of the Student Borrower Protection Center.
“It’s just another insult to borrowers in this system,” he says. His organization is particularly concerned when the government turns on payments before the backlog is cleared.
In some cases, there is more at stake than the discomfort of waiting. The program provides that borrowers not only make 120 qualifying payments while working for an Eligible Employer, but that they are still working for an Eligible Employer at the time the loan is granted.
This requirement added stress to Melissa Pennise of Rochester, NY while she waited. In January she asked for forgiveness. She works for a public health nonprofit, and like most nonprofits, resources can change from year to year based on funding. What if her job was gone when this year’s budget was set in April?
Fortunately, that didn’t happen. And she logged in last week and found that her $ 104,000 balance had been canceled.
Borrowers who are eligible for government loan approval face massive delays in student debt relief, she says. “But there is nothing you can do until those credits are gone.”
In the past few years, FedLoan, the government-hired public sector lending service provider, has become much better at providing borrowers with updated information on their lending progress, Pennise says. But once she applied it was much harder to get answers. (FedLoan has referred questions about the waiting time for forgiveness to the Federal Office for Student Aid in the Department of Education.)
Borrowers like Pennise have visited Reddit, Facebook, and Twitter to share stories about what to expect in the absence of further official information.
It’s not just people standing at the end of the street who have to struggle with delays. Borrowers attempting to certify their employment or receive an updated number of qualifying payments that they have made report similar delays.
Arthur DeVore III submitted his employer certification papers in December. He’s still waiting. He also has personal loans so every month when he pays his personal loans he calls to check the status of his PSLF employment certificate form. He works for New York City’s Equal Employment Practices Commission. It’s a local government agency so it should be an isolated incident.
“I’m frustrated because it shouldn’t take that long,” he says. “What kind of extreme verification process do you have that this takes seven months?”
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Under normal circumstances, according to Betsy Mayotte, founder of the Institute of Student Loan Advisors, which provides free student loan repayment advice, it typically takes between 45 and 90 days for a final public service loan approval notice to be given is obtained. The timeline is definitely longer now, she says, likely because of the disruption caused by the pandemic.
She assumes that the schedule will be shortened again in the next few months. And the government has developed a new tool to speed up the certification process if your employer is already on the system as a PSLF approved employer. Mayotte says borrowers who have used the tool seem anecdotally to report a much shorter timeframe than people who hand-submit their papers.
In the meantime, a simple improvement would be if borrowers were given clearer information about the schedule when applying for waiver.
“Even if the timeframe is not ideal, it at least raises expectations,” says Mayotte. Right now, instead, some borrowers report that the customer service reps say they are not allowed to provide a schedule. As a result, people keep calling for updates or submitting multiple applications, which only clogs the system further, Mayotte says.
It has to do with what Cocuzza went through. When she first submitted her application and asked for a schedule, she recalls being told it could be two or three months. But on subsequent calls to FedLoan, she received conflicting responses.
“In my opinion, you could probably call three times in one afternoon and get three different stories about your application,” she says.
Despite these challenges, Cocuzza is a success story. Last week, after 154 days, she checked in after lunch – her second check-up of the day – and found that her application had finally been processed. Her loan balance dropped from $ 227,609 to $ 0.
“When I realized the credits were zero, I just started sobbing.”
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source https://collegeeducationnewsllc.com/borrowers-stuck-waiting-for-public-service-loan-forgiveness/
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