New rules for civil servant loan forgiveness

Under these new regulations, effective July 1, 2023, federal student loan borrowers will be able to obtain credit for payments they were previously ineligible for. These may include partial, delinquent, or lump sum payments, payments under alternative repayment plans, and deferrals and grace period credits.

To qualify, you must have a direct loan. If you have either a Federal Family Education Loan (FFEL) or a Federal Perkins His loan, you must consolidate your loan into a direct loan with a servicer by July 2023.

Check out our consolidation loan application to see what you need to apply for. The borrower has until May 1, 2023 to apply for the consolidation, as the process can take months, officials said.

The plan also makes some of the changes the Biden administration introduced a year ago permanent, with a limited waiver that ends Oct. 31.

Borrowers who missed the October deadline now have another chance to recount their timelines if they are disqualified due to loan type or repayment plan.

Borrowers stand to benefit from new rules counting deferred or grace period payments as early as this fall. Beginning in November, borrowers who have reached 120 payments towards the Civil Service Loan Forgiveness and borrowers with 20 or 25 years of payments under an income-driven repayment plan will begin receiving loan forgiveness.

The Department of Education said these administrative actions “will bring most loans administered by the department closer to forgiveness.”

Mark Kantrowitz, an expert in higher education, said that before the changes to public service loan forgiveness were implemented, “only 3% of borrowers who applied for forgiveness received a loan forgiveness.” says.

As of August, the proportion of borrowers exempted under the expanded program had jumped to about 14.5%, he said. Kantrowitz estimates that more than 17% of his applicants have received loan forgiveness as of last month.