Some Hopeful News on Loan Forgiveness and Debt Collectors

Recent News

Changes (or hopes for change) in student loan policy pop up in the news fairly frequently. Here are a couple such changes that will undoubtedly have tangible impacts on federal loan borrowers:  A temporary expansion of public service loan forgiveness, and the recent end to specified government student debt collectors. As we continue, we will look at these news items and ponder some of their effects.

Expansion of Student Loan Forgiveness

We hear about this modern, myth-like story that there exists a way to have student loans forgiven. Just, ta-da! no more worries, you’ve paid the dues you need to pay, we’ll take it from here, that will be all, thank you. Perhaps this version of the story truncates the truth a little (okay, a lot). However, as with many myths, we can find something useful by keeping our eyes open for loan forgiveness options. Here is the recent announcement from the U.S. Department of Education: They have modified the difficult requirements of attaining public service loan forgiveness, expanding them to include some of the people who had previously been denied. The amount going towards this cause? An allotted $350 million.

False Sense of Generosity

Before looking at the other news item, let’s mull this one over. Yes, the Department of Education has provided $350 million for this loan forgiveness expansion. But no, it is not an easy fund to access. The core demographic this temporary expansion aims to reach is the body of students who had not realized their chosen repayment plans were not counting toward public service loan forgiveness. They had either not been informed or had been misinformed early on. After being denied loan forgiveness, they then found themselves in unplanned-for, ongoing debt. This situation especially disheartens individuals who perfectly meet all other requirements for public service loan forgiveness. The temporary expansion is an opportunity for such borrowers to reapply, to again undertake the tedium of paperwork, research, careful reading, and careful questioning.

Still, the expansion does not include all repayment programs. Furthermore, one’s repayment program is not the only factor to consider. Instead of regurgitating the slew of relevant requirements and conditions, I will point you to this Federal Student Aid page. If you suspect you are eligible to take advantage of the loan forgiveness expansion, visit that page and begin applying. The money will be given on a first-come, first-served basis, so go ahead and try soon.

There is the chance, oddly enough, that not all these funds will be used. This would not be due to a lack of interest, but a lack of ability to navigate the complex requirements. All applicants have to navigate many caveats and conditions before the government accepts their loan forgiveness requests. The process’s time-consuming nature might deter many would-be forgiveness candidates. We can still hope, nevertheless, that these funds reach the people who need and deserve them.

Relinquishing Our Collection of Debt Collectors

For those who will not qualify for public service loan forgiveness, there is a slightly more applicable thing to celebrate. So, the title of this section might be slightly misleading, as the U.S. government does not have a stored-up collection of debt collectors. There are, however, private agencies working solely on collecting overdue student debt. As Danielle Douglas-Gabriel makes note of in her recent article for The Washington Post, the systemic overhaul being made in the Department of Education is allowing for many new expectations and regulations. One such regulation requires doing away with private debt-collecting agencies and assigning their tasks to loan servicers already in place.

Having debt defaults handled by loan servicers who have the whole customer’s life in mind will mean less apathetic or aggressive interactions between the debt collector and the person paying back debt. Hitherto, private agencies simply target their need, which is to collect money from those defaulting on their loans. They have not had incentive to think holistically about their customers. Now with this job attached to other jobs — including updating people on their repayment plans and providing relevant information — the debt collection will work more as part of keeping a healthy system, not as the dreaded enemy singled out from the rest of the loan repayment process.

While this transition will likely take a few months (or longer), it is encouraging to know it’s underway. And while the process to benefit from the extra $350 million dedicated to public service loan forgiveness is somewhat convoluted, it is not impossible. I hope, from these recent funding and policy changes, we can experience a touch of hope to what can often be a discouraging aspect of life.

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