Some teachers in public schools across the metro New Orleans area have tens of thousands of dollars in student loan debt, but thanks to a temporary change in the Public Service Loan Forgiveness program rules, many more may be able to qualify for forgiveness.
In October, because of the pandemic, the Biden Administration loosened the qualifications for the program, allowing those who have different kinds of loans or who have paid using different payment plans to qualify for forgiveness. With the changes, past years of payments that wouldn’t have counted toward the 10 years of service for borrowers now count, meaning many teachers could be much closer to receiving full forgiveness.
“It is incredibly generous to borrowers,” said Ryan Frailich, a charter school teacher turned financial adviser who led a webinar session on student loan forgiveness this week. “It is taking people who otherwise were shut out of the program, maybe applied and were told, ‘Sorry, you have the wrong loan type, go back to start to do 10 more years,’ and saying ‘Actually, we’re gonna give you full credit. And we’re gonna forgive all your debt even though you technically didn’t follow the letter of the rules.’”
The problem? The waiver that expands qualifications for debt relief will only remain in place until Oct. 31, and New Schools for New Orleans, an education nonprofit, found that many educators are unaware of it.
What’s Public Service Loan Forgiveness?
The program allows teachers, government workers, nonprofit employees and others to receive forgiveness of their federal student loans after 120 payments, or 10 years, while working in the public sector.
In the past, educators have had varying levels of success in getting forgiveness through the program, in part because of stringent requirements on the type of loans and payment plans. Typically only direct federal loans paid using income-driven repayment plans qualified for the program, even if debtors worked in public service for 10 years.
New Schools for New Orleans launched an awareness campaign to spread the word to teachers, hosting regular webinars for educators. The group surveyed 700 educators who have participated in the webinars and found roughly half had more than $50,000 in debt, with some as much as $100,000 or more, said Jahquille Ross, director of teacher support at NSNO. Some teachers in New Orleans public schools — where the average starting salary for teachers is $43,564, and the average salary overall is $51,500 — owe more in debt than they make in a single year, he said.
NSNO estimated that educators across New Orleans could receive $8 million in immediate loan forgiveness.
How does the waiver change things?
To qualify for the Public Service Loan Forgiveness, a person must have a direct federal loan, work for a 501c3 nonprofit or government job and make 120 monthly payments on an income-driven repayment plan. With the waiver, borrowers will get credit for any type of payment plan, different types of loans and other factors that were previously excluded from consideration.
The waiver will close on Oct. 31, and Frailich encouraged those who have been rejected before to apply again.
“This is sort of like a ‘one time, we’re gonna give you credit for things that technically don’t follow the rules,’ but you have to act by Oct. 31,” Ryan said.
Marie Fazio writes for The Times-Picayune | The New Orleans Advocate as a Report For America corps member. Email her at [email protected] or follow her on Twitter @mariecfazio.
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