Student Loans – Two Immediate Deadlines, Third Approaching

Big deadlines are quickly approaching related to student debt! Nonprofit organizations (and their staff) should take note. While these deadlines are not related to MANP's current advocacy work, we know that many workers at nonprofits have student debt, and are impacted by changes to government student loan programs. We also want to take every opportunity to highlight the Public Service Loan Forgiveness program - an important tool for employee recruitment and retention in the nonprofit field.

Loan Consolidation Deadline – April 30

The end of this month is the deadline for borrowers with outstanding Family Federal Education Loans (FFEL) loans--which includes parents who took out parent-student loans (Parent PLUS)--to consolidate them into a Direct Loan; otherwise, those borrowers, including charitable nonprofit workers, will lose important benefits. FFEL loans do not generally qualify for Public Service Loan Forgiveness (PSLF); federal Direct Loans do. Borrowers have until April 30 to submit a consolidation application via studentaid.gov to not only have FFEL loans counted for PSLF, but also receive retroactive credit for past payments under the Income-Driven Repayment Account Adjustment program.

See Special Alert – Nonprofit Employees: FFEL student loan borrowers must take action for PSLF by April 30, 2024! and watch this short video on Maximizing the Benefits of the IDR Account Adjustment (06:55) by the Student Borrower Protection Center for more information.

Download and Save Your PSLF Records by April 30

Beginning May 1, the Public Service Loan Forgiveness (PSLF) program will be managed through the StudentAid.gov site and no longer through a designated loan servicer, including MOHELA. After April 30, borrowers will no longer be able to access their PSLF progress, payment counts, or certified employment document records on the MOHELA borrower portal. Therefore, all borrowers in the PSLF program should immediately download all PSLF records, take screenshots, and save all correspondence for recordkeeping by April 30.

Also, the Department of Education encourages borrowers to submit their employment certification forms through the PSLF Help Tool by April 30. Starting May 1 and going through July 2024, the processing of PSLF and TEACH Grants will be paused temporarily as records are transferred. Importantly, the Department of Education states, “Payments are still due during this pause, so continue to make payments to your loan servicer.” 

For more details, click on the “I’m Working Toward PSLF” dropdown on  Federal Student Aid’s page, We’re Streamlining Your Loan and Grant Web Experience.

Proposed Debt Cancellation Plan – Comment Deadline – May 17

Last week, the Biden Administration published a Notice of Proposed Rulemaking on its new debt cancellation plan to cancel some accrued interest, automatically forgive certain qualifying borrowers in certain payment plans including Public Service Loan Forgiveness (PSLF) and other income-driven repayment plans like SAVE without requiring paperwork, and potentially lower monthly payments for certain borrowers. Some income-driven repayment plans do not cover the interest accrued each month, resulting in the borrower’s debt continuing to balloon. The plan would cancel up to $20,000 of the borrower’s balance that had grown due to unpaid interest. Other debt would be cancelled for borrowers who have been in repayment for 20 years or more on undergraduate loans or 25 years or more on graduate loans. Public comments are due May 17.

See Biden-Harris Administration Releases First Set of Draft Rules to Provide Debt Relief to Millions of Borrowers. The previous debt cancellation plan was challenged and ultimately struck down by the U.S. Supreme Court last year. This plan is expected to be challenged as well.