State leaders: respect the deadline; Apply now for the Civil Service Loan Forgiveness Scheme
By Antonio Ray Harvey | California Black Media
(CBM) – California Attorney General (AG) Rob Bonta is urging Californians to take advantage of recent changes to the Public Service Loan Forgiveness (PSLF) and Temporary Expanded Public Service Loan Forgiveness (TEPSLF) programs.
Bonta’s announcement coincides with a CNBC survey that reports that 31% of black women are disproportionately affected by student debt. Additionally, four years after graduation, 48% of black students owe an average of 12.5% more than they borrowed, according to the Educational Data Initiative (EDI).
Assemblywoman Mia Bonta (D-Alameda), a member of the California Legislative Black Caucus (CLBC), shared her own struggles with paying off student debt.
“I graduated with over $150,000 in student debt. I was 20 then,” she said. “I didn’t make my final payment until almost 20 years later, just in time to send my eldest daughter to college.”
According to Bonta, a black woman owes 112% of the amount of the loan she takes out 12 years after starting college. For a Latina, 12 years after starting college, she will owe 86% of that loan.
“Black and Latino students, from low-income communities, carry disproportionate student debt,” Bonta said. “I witness it every day.”
The PSLF and TEPSLF programs are entirely different from President Joe Biden’s plan for targeted cancellation of student debt to borrowers with loans held by the Department of Education. Eligible borrowers must have “an annual income of less than $125,000 (for individuals) or less than $250,000 (for married couples or heads of households). Qualifying borrowers can see up to $10,000 of eligible debt forgiven. If the borrower received a Pell Grant, the borrower could have up to a total of $20,000 in forgiven debt.
Biden also extended the pause on student loan repayment, interest, and collections through Dec. 31, 2022.
Last year, the U.S. Department of Education (ED) launched a limited-time PSLF waiver opportunity that extends through October 31. It allows eligible borrowers to receive credit for past student loan payments that would otherwise not be eligible for the PSLF program.
ED improved the PSLF program in response to a years-long lawsuit and advocacy by a number of state attorneys general and others urging ED to fix the flawed program.
Following the resolution of the lawsuit, AG Bonta continued to advocate for changes to the PSLF program. The California Department of Justice (DOJ) is participating in the California Student Loan Debt Challenge to raise
awareness of the PSLF program to help DOJ employees access loan forgiveness.
“On behalf of the more than 5,000 officials of the California Department of Justice, I am proud to take on the California Student Debt Challenge,” said AG Bonta. “Our public servants work day in and day out on behalf of the people of California as nurses, teachers, first responders, state employees, and more. I urge you to take advantage of the new PSLF limited waiver opportunity before the October 31st deadline.
California ranks 13th among states in student debt, with borrowers owing an average of $37,084. California’s student loan debt stands at $141.8 billion, the highest amount of any state.
According to the EDI, student debt statistics show huge disparities between racial and ethnic groups.
African-American college graduates have an average debt of $25,000 more than white graduates. Four years after graduation, 48% of black students owe an average of 12.5% more than they borrowed.
Black student borrowers are the most likely to experience financial hardship due to a student loan, with 29% making monthly payments of $350 or more. About 3% of California borrowers owe more than $200,000 and nearly 10% of the state’s population has student loan debt.
The moratorium on federal student loan repayments expires August 31. A total of 43 million Americans have student loan debt — worth $1.6 trillion, according to federal data.
“Fortunately now, there are federal and state programs that can play a vital role in reducing or eliminating student debt altogether,” Mia Bonta said. “We now have this last opportunity to publicize these programs. Beyond that, we need to simplify the application process and create a better coordinated outreach program between higher education institutions, government and the private sector.
Under the PSLF’s limited waiver rules, any prior repayment period counts as an eligible payment, regardless of loan type, repayment plan, or whether the borrower has made a payment or not, or whether the payment was completed in full or on time.
Each borrower must work for an eligible private or non-profit employer. The temporary change applies to borrowers with direct loans, those who have already consolidated into the direct loans program, and those who have consolidated into the direct loans program by October 31, 2022.
There are two conditions for receiving additional qualifying payments:
Full-Time Employment – Borrowers must have worked full-time for an eligible employer during previous repayment periods. They only receive credit for repayment periods after October 1, 2007, when the PSLF program began.
Loan Consolidation – Borrowers with Federal Family Education Loan Program (FFEL) loans, Federal Perkins loans, or other types of federal student loans that are not direct loans must consolidate those loans in the program direct loans by October 31, 2022.
If the borrower had direct loans and had certified PSLF employment, ED will grant additional payments without further action. If necessary, Federal Student Aid may contact the borrower to certify additional months of employment.
An employer must be a government organization, 501(c)(3) organization, or non-profit organization that provides a designated public service in order to qualify for the PSLF under the normal rules and the limited PSLF exemption.
“My team has been advocating for years for the Department of Education to fix this flawed program, and with the recent changes under the Biden administration, Californians are finally starting to receive relief,” AG Bonta said.
Get more information about the loan cancellation program.
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