Student loan forgiveness for public sector workers to be temporarily paused until July

Student loan forgiveness for some public-sector workers will be temporarily paused beginning Wednesday, as the Department of Education announced it will be transitioning into managing the program in-house.

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The transition is expected to last through July and will affect 2 million borrowers enrolled in the Public Service Loan Forgiveness (PSLF) program and the Teacher Education Assistance for College and Higher Education (TEACH) grant program, according to the DOE.

The PSLF program cancels student debt remaining after an eligible borrower has made 120 monthly qualifying payments toward the loan.

The loans for PSLF borrowers are serviced under federal contract by MOHELA (the Missouri Higher Education Loan Authority), but after the transition, borrowers will find their up-to-date payment records and other information at the Federal Student Aid office’s website. The website is also the place where borrowers will submit their PSLF forms to certify eligible employment or apply for forgiveness.

About 1 million loans will be transferred away from MOHELA while others will stay with the company.

The change also applies to the TEACH program which provides money to students who agree to teach certain subjects in certain low-income districts.

Borrowers will continue to make payments through the transition process.

While loans are generally forgiven after the 120th qualifying payment is made, during the transition process, the request for forgiveness will not be processed, and borrowers will have to wait for their debt to be canceled.

According to the Department of Education, a borrower can contact their loan servicer to ask for a forbearance if they hit the 120th payment during the transition period. Any payments made over the 120th payment will be refunded, the DOE said.

If you have a TEACH grant and have completed the four years required under the grant, you must submit a form that documents the teaching service. However, during the transition, which will last into fall 2024 for the TEACH grant program, those forms will not be processed. During the pause, the form can be submitted by mail or the recipient can wait until the fall to upload it online.

If the required teaching time is not served, the grant is converted into a loan.

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