Student borrowers have been relieved of some stress and anxiety over their student loans during the pandemic. Congress passed the CARES Act and suspended payments and interest accrual on federally-held student loans through September 30, 2020 as part of lawmakers’ effort to provide Americans with economic relief.
For borrowers hoping to receive student loan forgiveness under the Public Service Loan Forgiveness (PSLF) program or through income-driven repayment (IDR), there are a few additional things they need to know.
Payment suspension counts toward some forgiveness.
The best news for student borrowers who want to receive loan forgiveness under PSLF or IDR is that the student loan suspension counts towards the required payments to receive loan forgiveness. As long as a borrower would have otherwise qualified for forgiveness, these months of non-payment will count. That means borrowers seeking PSLF must be employed in qualifying work. Unfortunately, those who lost their jobs will not be able to benefit in the same way. Those enrolled in income-driven repayment before will still be counted as making payments during this time.
Remember to re-certify employment for PSLF.
While it is not required, it is recommended that borrowers hoping to receive public service loan forgiveness certify their employment every year in order to stay on track. It’s easy for many to forget to complete this step, especially as a large number of Americans are working remotely and also have their payments suspended. But by remembering to do so, student borrowers can ensure they have all the needed documentation to receive forgiveness when the time comes to apply for forgiveness.
Remember to re-certify income for income-driven repayment.
Borrowers in income-driven repayment plans are required to annually re-certify their income to report any changes. This process adjusts payments according to borrowers’ fluctuations in income. Student borrowers may have received communications asking them to re-certify their income, and while payments may be suspended right now, it’s important they complete this process to ensure they will remain on course. If borrowers fail to re-certify, they risk being moved out of income-driven repayment which can hurt their progress towards both PSLF and IDR forgiveness. (Note: If borrowers have lost income, due to working fewer hours or pay cuts, they should contact their loan servicer to report these changes for when payments do restart.)
Student borrowers should keep an eye on what Congress does in the coming weeks. The student loan repayment suspension ends on September 30th and many are proposing extending that hiatus as part of the next stimulus package. Others are also calling for universal student loan forgiveness, though it is unclear if that will be included. Any bill that is passed could impact borrowers either by offering more relief, or by restarting payments in October.
For more information on student loan forgiveness under these programs, read “What Student Debt Forgiveness Programs Exist Now?” or contact the U.S. Department of Education or your student loan servicer.