First responders have several options to get their federal student loans forgiven. Below, we’ll explore these programs and how you can benefit from them.
Public Service Loan Forgiveness
Public Service Loan Forgiveness was created to attract and keep talented people in public service jobs by offering a unique benefit: Tax-free loan forgiveness after 10 years of work and 120 on-time, qualifying payments.
Related: When Did PSLF Start?
In the past two years alone, the PSLF Program has helped first responders, emergency medical technicians, paramedics, health care workers, law enforcement personnel, and rescue workers eliminate over $32 billion in federal student debt.
Related: Student Loan Forgiveness for Government Contractors
But it wasn’t always this easy. Before the Biden administration introduced changes to relax eligibility requirements, the program was difficult to access. Now, however, it is much more accessible to those in need.
The PSLF Waiver ended last October, but a similar one — the IDR Waiver — offers many of the same benefits and will last until next summer.
To qualify for the Public Service Loan Forgiveness (PSLF) program as a first responder, you must work for an eligible employer and make payments toward federal Direct Loans. If you have Federal Perkins Loans or Federal Family Education Loans (FFEL), you must consolidate them into a Direct Consolidation Loan by May 1, 2023. You can do this on the Federal Student Aid website, StudentAid.gov. You can also use this site to access the PSLF Help Tool and generate a PSLF Form to send to your past qualifying employers.
Related: How to Consolidate Student Loans for PSLF
Income-Driven Repayment Forgiveness
Income-driven repayment plans cap your student loan payments at a percentage of your discretionary income and extend your repayment term from 10 years to 20-25 years, depending on the plan you choose and whether you borrowed loans for graduate school. If you get to the end of the term and still have a loan balance, the government will write it off. You may owe taxes depending on IRS regulations.
Related: Income-Based Repayment Forgiveness
IDR Forgiveness is an option for all first responders, whether they work in public service or not.
The U.S. Department of Education is reviewing student loan borrowers’ accounts to give them credit towards this forgiveness opportunity for payments they made under any repayment plan. It will also credit them for months spent in long forbearance periods and some deferments that occurred before 2013.
Department officials estimate the IDR Waiver will automatically cancel the debts of 40 thousand people and push millions more at least three years closer to relief.
This opportunity is only available to borrowers with loans owned by the Education Department or Ed-owned student loans. You have these types of loans if your payments and interest have been frozen since the start of the pandemic.
If you’ve had to keep paying your federal loans throughout the pandemic, you must consolidate those loans into a Direct Loan before next summer to have your payment history reviewed.
Biden’s debt cancellation plan
Last fall, President Biden announced a plan to cancel up to $20 thousand of federal student loan debt for Americans who received a Pell Grant and earned less than $125 thousand in 2020 or 2021. This proposal would have provided relief to millions of Americans, including hundreds of thousands of first responders. The Education Department rushed to create the application so it could begin delivering an estimated $400 billion in relief, which would have significantly reduced total student debt.
But not everyone was on board with paying for their neighbors’ college education. Biden’s plan faced opposition from Republican lawmakers and conservative groups and was met with legal challenges across the states.
The plan is on hold while the Supreme Court determines the president has the authority to provide the promised relief.* If he does, the Education Department plans to immediately apply the relief to borrowers’ accounts. Legal experts expect the Supreme Court to release its decision this summer.
* To justify the president’s announcement of student debt forgiveness, the Education Department released a memorandum highlighting the legal reasoning behind an executive order to cancel student debt. The memorandum argues that the Higher Education Relief Opportunities for Students (HEROES) Act of 2003 can be used to implement this plan, pointing to its past use for student loan relief during other national emergencies and its relevance in addressing the economic fallout from the COVID-19 pandemic.