In 2007, Congress created the Public Service Loan Forgiveness (PSLF) program to encourage citizens to serve their communities and country through public service, including military service. For years of military borrowers have complained to the CFPB about sloppy student loan service practices that prevented them from obtaining the benefits promised by PSLF. And in 2020, the GAO reported that 176,906 active-duty service members had federal loans that were eligible for the PSLF program or that could be consolidated into eligible loans, but only 124 service members received loan forgiveness under the PSLF.
In October 2021, the Ministry of Education announced swipe action increase student borrowers’ access to PSLF services. Public service employees, including the military, are now eligible for a credit for remitting payments that were previously not eligible. Service members who already have direct loans will be automatically identified by the Department of Education to receive benefits. But service members with Perkins or Federal Family Education Loans (FFEL) must consolidate those loans into Direct Consolidation Loans before submitting their PSLF applications. And to benefit from it, they must take these steps before October 31, 2022.
It is possible that tens of thousands of service members could benefit if they receive the correct documents submitted before the deadline. But to do this, service members must receive the information and support they need from their student loan officer. With military loan forgiveness in play, military members should use every tool at their disposal to identify military borrowers and ensure they get the credit to PSLF they deserve under the program.
The military has all the information they need to identify military borrowers
The military has a simple solution for reaching the military: they are already required to verify which borrowers are in the military and are covered by the Military Civilian Relief Act (SCRA). Servicers can review the information they already have to find military borrowers with Federal Family Education Loans or Federal Perkins Loans who could benefit from consolidation into Direct Consolidation Loans to qualify for the PSLF. Then services can provide information to these military borrowers to ensure they are aware of the PSLF waiver and its benefits, and follow up to provide any assistance military borrowers need to benefit from the program. .
Thanks to recent measures taken by the Ministry of Defense clearly the services can use the information they already have on their books to contact military borrowers about PSLF.
This awareness is the right thing to do
Between active duty, traveling between duty stations, and the pressures of military life, it’s essential that student loan managers be especially attentive to the needs of military personnel. Managing student debt is a serious issue – it’s not trivial amounts of money. Many military borrowers have student loans that exceed the average home mortgage in America. For military borrowers, failure to have their PSLF application approved will result in them needlessly paying thousands or tens of thousands of additional dollars on their student loans. This additional cost can have cascading effects, crowding out service members’ ability to save for a home, build a nest egg for retirement, or save for their children’s college tuition. Additionally, successfully managing military student loans increases financial readiness, which can impact a military member’s ability to meet their wartime responsibilities. Not ensuring that the military receives full PSLF benefits would be particularly absurd, since the military already knows which of their borrowers are in the military and are already paid to help them. The military have dedicated their lives to protecting the United States – it’s time to protect their financial future.
Are you a military man with student loans? Take action
If you are reading this blog post and you are a military service member with student loans, or a family member of a military service member with student loans, act now to ensure that you or your loved one benefit of all the benefits provided by the new PSLF rules. Military borrowers with Federal Home Education Loans or Federal Perkins Loans must consolidate their loans into a federal direct consolidation loan and submit a PSLF application before October 31, 2022. Military borrowers who already have a Federal Direct Consolidation Loan should apply for a PSLF if they have not already had their employment certified. You can learn more about the process at Ministry of Education website , and by consulting our PSLF guide. And if your student loan officer isn’t giving you the information and support you need to benefit from the new PSLF rules, file a complaint.
