The Biden administration announced this week that it will pause student loan forgiveness processing under a key program.
The suspension is part of a broader transition, whereby the Department of Education will be taking over the administering of several student loan forgiveness programs from contracted loan servicers. During the pause, borrowers can submit student loan forgiveness applications, but will not receive any discharges until the transition period is complete.
Here’s what’s going on, and what borrowers need to know.
Student Loan Forgiveness Processing Suspended For PSLF As Big Changes Are Made
The processing pause pertains to the Public Service Loan Forgiveness program. PSLF can provide student loan forgiveness for borrowers working in nonprofit or public-sector jobs in as little as 10 years. The Biden administration has implemented a number of significant reforms to PSLF which has resulted in hundreds of thousands of borrowers getting approved for loan forgiveness. Previously, PSLF had a 99% rejection rate.
In the latest big change, the Education Department will be transitioning PSLF operations to its own platform from MOHELA, one of its contracted loan servicers. Advocacy groups have accused MOHELA of inadequate servicing, and the Education Department has also penalized the company for untimely or erroneous billing. MOHELA has denied the accusations, and has said that criticisms of its servicing practices are grossly exaggerated and taken out of context.
The transition of the PSLF program to the Education Department’s StudentAid.gov portal was long planned. As part of the shift to the Department of Education’s servicing platform, all processing of student loan forgiveness applications under the program will be suspended from May until July of this year.
“Beginning May 1, 2024, the Public Service Loan Forgiveness (PSLF) and Teacher Education Assistance for College and Higher Education (TEACH) Grant programs will no longer be managed through a designated loan servicer. Instead, we are updating our systems and contact centers to streamline and fully manage these programs through StudentAid.gov,” said the Education Department in an announcement published this week. “We will move these programs from MOHELA to ED on StudentAid.gov. This means that starting on May 1, 2024, we will pause processing any forms for PSLF and TEACH Grants.”
What Borrowers Should Expect As Student Loan Forgiveness Processing For PSLF Is Suspended
The suspension of student loan forgiveness processing under PSLF is expected to last three months, from May through July of this year. According to the Education Department, the entire PSLF program will essentially be on pause during that time.
“Beginning on May 1, 2024, you will no longer be able to access your PSLF progress, certified employment, or payment counts on MOHELA’s borrower portal,” says the department. “You will not see updates to your PSLF payment counts as you make qualifying payments or certify employment with a PSLF form submission during the pause in processing.”
Borrowers can still submit their PSLF employment certification forms online using the PSLF Help Tool during the suspension period. But the forms will not be processed until the pause ends in July. “If you want to save screenshots and correspondence for your personal records, we recommend accessing the portal by April 30, 2024,” suggests the department.
Borrowers should also expect that their servicer may change. “If MOHELA is your loan servicer, your account might be transferred to their new servicing platform or another servicer after May 1,” says the announcement. “Starting in July, ED will fully manage the PSLF Program, but your loans will remain with a loan servicer.”
The department expects that once the transitionary process is completed in July, all information on PSLF will be accessible to borrowers via StudentAid.gov. This includes PSLF payment counts, self-service tools, and student loan forgiveness application tracking. Borrowers who submit PSLF forms and are waiting on PSLF payment count updates should receive those updates after the July completion of the transition.
Other Student Loan Forgiveness Processing May Also Get Suspended
The transition to Education Department-administered student loan forgiveness — and the accompanying suspension of processing — won’t be limited to the PSLF program.
TEACH Grants will also be simultaneously impacted. TEACH Grants are grants (not student loans) issued to certain teachers. “Beginning May 1, 2024, there will be a pause in processing for all TEACH Grant forms while we transition the program to ED on StudentAid.gov. This transition will last into fall 2024,” says the department.
Later in the fall, the Education Department will also transition the Total and Permanent Disability discharge program in the same manner. The TPD discharge program provides student loan forgiveness for borrowers who are medically disabled. Nelnet, another department servicer, currently administers TPD discharges.
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