The Biden administration recently announced a pause in the processing of student loan forgiveness applications under the Public Service Loan Forgiveness (PSLF) program. This decision is part of a larger transition wherein the Department of Education will be taking over the administration of several student loan forgiveness programs from contracted loan servicers. The pause is expected to last from May to July this year, during which borrowers can still submit forgiveness applications but will not receive any discharges until the transition is complete.
PSLF is a program that offers loan forgiveness to borrowers working in nonprofit or public-sector jobs after 10 years of payments. The Biden administration has made significant reforms to PSLF, resulting in a higher approval rate for forgiveness applications. The Education Department is transitioning PSLF operations to its own platform from MOHELA, a contracted loan servicer that has come under scrutiny for inadequate servicing. Advocacy groups have accused MOHELA of errors and untimely billing, prompting the Education Department to take over the program.
As part of the transition, all processing of student loan forgiveness applications under the PSLF program will be suspended from May to July this year. Borrowers are encouraged to save screenshots and correspondence from MOHELA’s borrower portal before May 1, 2024, as they will not be able to access their PSLF progress during the suspension period. The Department of Education expects that once the transition is completed in July, all information on PSLF will be accessible to borrowers via StudentAid.gov.
In addition to PSLF, other student loan forgiveness programs will also be impacted by the transition to Education Department administration. TEACH Grants, which are grants issued to certain teachers, will undergo a pause in processing starting on May 1, 2024. The transition for TEACH Grants is expected to continue into the fall of 2024. The Total and Permanent Disability discharge program, which provides forgiveness for medically disabled borrowers, will also be transitioned in the same manner later in the fall.
Overall, the transition to Education Department-administered student loan forgiveness programs is aimed at streamlining operations and improving servicing for borrowers. While the processing of forgiveness applications will be suspended during the transition period, borrowers can still submit forms and certify their employment online. The Education Department expects that the transition will result in better accessibility and tracking of forgiveness applications for borrowers once it is fully implemented. Borrowers are advised to stay informed about the changes and updates to the programs during this transition period.
