Public servants with federal student loan debt just got some good news. The Department of Education announced major changes to the Public Service Loan Forgiveness (PSLF) Program that will make it easier to qualify for loan forgiveness in what has been a notoriously ineffective program.
The changes will immediately erase more than $1.7 billion in student loan debt for 22,000 borrowers, according to the department. An additional 27,000 borrowers could see their $2.8 billion in debt disappear if they can prove that they were working in public service when they made payments that had been declared ineligible. The key to unlocking loan forgiveness for more than half a million borrowers comes in the form of a waiver, in effect through October 2022.
Related: How do student loans affect your credit score?
A More Forgiving Program
Under the new rules, any federal student loan payment that was made will count toward PSLF, regardless of loan type, repayment plan or whether the payment was on time or in full, as long as the borrower was working full time for a qualifying employer.
The PSLF waiver will apply to borrowers with Direct Loans, those who have already consolidated into the Direct Loan Program, and those with other types of federal student loans who submit a consolidation application through Oct. 31, 2022. Here is more detail.
More Loan Types Qualify
Congress created the PSLF Program in 2007 to entice more people into public service jobs. Borrowers who had federal Direct Loans, worked full time for a qualifying employer and made 120 on-time loan payments were eligible for forgiveness of any remaining balance.
Back then, most people had government-backed bank loans known as Federal Family Education Loans (FFEL). But by 2010, the Education Department made all federal student loans directly. Hundreds of thousands of borrowers who thought they were eligible for public service loan forgiveness didn’t realize that the payments they were making on their FFEL loans didn’t count toward loan forgiveness.
The changes now allow borrowers to consolidate FFEL program loans and Perkins Loans into Direct Loans that will qualify for forgiveness after 10 years of payments with a qualifying employer. What’s more, the government will now retroactively count payments made before loan consolidation toward the 120-month payment requirement for forgiveness.
Any Payments Made Will Count
The new rules allow payments made while working in a public service job through alternative payment plans, such as the extended repayment plan, to be counted toward forgiveness. It also gives dispensation for late payments and makes it much easier for veterans and military members to get credit for payments while on duty.
One area that is not covered? The new rules apply only to loans taken out for yourself. That means parent PLUS loans do not qualify for credit for past payments.
Steps to Take on the PSLF Path
Encouraging as the announcement is, few borrowers and student loan experts expect the changes to take place without, at best, some hiccups. And the announcement comes not long before the COVID-inspired federal student loan payment pause ends on Jan. 31, 2022. That may cause further confusion.
Another wrinkle: FedLoan Servicing, the sole loan servicer for the PSLF program, is calling it quits. Borrower accounts are being transferred to MOHELA and to other servicers. That’s why it’s important for borrowers to pay close attention to how changes are implemented in the next months and make sure they complete any necessary forms or applications and meet all deadlines. This borrower to-do list, culled from the Education Department’s fact sheet, can help.
1. Determine If Your Loans Are Eligible
If you’re not sure what type of federal student loans you have or had, you can get a full list when you log into your account on StudentAid.gov. If you don’t have an account, you can start one now. You’ll see each loan you borrowed even if you’ve paid it off or consolidated it into a new loan. For loans that qualify for the new forgiveness rules, you want to look for items in the list that start with “Direct,” “Perkins” and “FFEL.”
2. Ensure That Your Employer Falls Under the Public Service Category
Only borrowers who work for a municipal, state, federal, or tribal government or a nonprofit organization may take advantage of PSLF, both in the past and now. If you’re not sure your current or former employer is eligible, check the Department of Education’s website for tools that may help.
3. Consolidate Your PSLF-Eligible Loans
Consolidate means that you will turn your FFEL or Perkins Loans into a Direct Consolidation Loan.
To do this you want to apply for the PSLF Program, even if you have done so before. Once you do, previous payments, as long as you meet employer eligibility requirements, should be counted toward your 120-month finish line.
Important: You need to send this by the Oct. 31, 2022, deadline. Do it earlier and you may find debt relief faster.
If you have already consolidated other debt, you should get notification that you are a go. (See the next step.) But a lot depends on if you filed employer certification confirming that you worked for a qualifying employer at the time. You’ll need to check on that, and, if there’s any question, it might make sense to go ahead and file a new consolidation application.
4. Keep Track of All Communications
If your loans qualify and you have already filed your employer status, the Education Department probably will take steps to forgive your loan balances or count past payments toward forgiveness automatically. But it’s up to you to make sure that is happening. In case you need to follow up to make sure that is happening:
- Copy and save all correspondence from the Department of Education regarding your loans.
- Always copy and save any forms or applications you send.
- Keep an eye out in your email for all department correspondence.
- Check spam. You don’t want to miss any notifications on your loan status.
Consolidating vs. Refinancing
For public service workers, consolidating any federal student loans other than Direct Loans is the route to take to try to gain loan forgiveness. With consolidation, multiple federal education loans are combined into one federal loan with a weighted average interest rate.
With refinancing, a private lender replaces one or more student loans with one new private loan that has a new interest rate and terms. The goal is to reduce the interest rates you’re paying. Refinancing your federally held student loans would mean giving up federal benefits like PSLF and income-driven repayment plans. But refinancing may make sense if you have private student loans or if you don’t qualify for PSLF and have high rates or high loan balances.
The Takeaway
An overhaul of the Public Service Loan Forgiveness Program holds promise for half a million borrowers. Potential hurdles will likely make themselves clear in the coming weeks and months.
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This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.
SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS, PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF JANUARY 2022 DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
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12 Benefits to Cryptocurrency in 2021
Crypto is a relatively new asset class that began with the creation of the Bitcoin blockchain in 2009. The primary benefit of Bitcoin and most other cryptocurrencies based on blockchain technology is that they don’t have a central authority, payment processor or company owner.
Instead, crypto networks are peer-to-peer, meaning people can transact directly with one another. Many of the additional benefits of cryptocurrency stem from their decentralized and peer-to-peer nature. Let’s look at some positives of cryptocurrency in this crypto guide.
Related: How to invest in Bitcoin
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Crypto transactions can be made easily, at low cost, and in a manner more private than most other transactions. Using a simple smartphone app, hardware wallet or exchange wallet, anyone can send and receive a variety of cryptocurrencies.
Some types of cryptocurrencies, including Bitcoin, Litecoin and Ethereum, can be bought with cash at a Bitcoin ATM. A bank account isn’t always required to use crypto. Someone could buy bitcoin at an ATM using cash then send those coins to their phone. For people who lack access to the traditional financial system, this may be one of the biggest pros of cryptocurrency.
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Because they are based on cryptography and blockchain security, decentralized cryptocurrencies tend to make for secure forms of payment. This might be one of the most certain benefits of cryptocurrency. Crypto security is determined in large part by hash rate. The higher the hash rate, the more computing power it would take to compromise the network. Bitcoin is the most secure cryptocurrency, having the highest hash rate of any network by far.
Using a crypto exchange is only as secure as the exchange itself, however. Most incidents of crypto being hacked involve exchanges being hacked or individuals making mistakes.
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While some people only want to invest in cryptocurrency for price appreciation, others might find benefit in the ability to use crypto as a medium of exchange.
Bitcoin and Ether transactions could cost anywhere from nickels and dimes to several dollars or more. Other cryptocurrencies like Litecoin, XRP and others can be sent for pennies or less. Payments for most cryptos settle in seconds or minutes. Wire transfers at banks can cost significantly more and often take three to five business days to settle.
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The cryptocurrency industry has been one of the fastest-growing markets that most of us have seen in our lifetimes. Being involved now might reasonably be compared to being involved with companies on the leading edge of the internet back in the 1990s and early 2000s. The total market cap of the cryptocurrency market in 2013 was about $1.6 billion. By June 2021, it rose to over $1.4 trillion.
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It’s no secret that Bitcoin has been the best-performing asset of the last 12 years. When it began in 2009, Bitcoin essentially had no value. In the following years it would rise to a fraction of a penny and then eventually to tens of thousands of dollars. This represents millions of percentage points’ worth of gains. By comparison, the S&P 500 index of stocks returns an average of about 8% per year.
Some altcoins have outperformed Bitcoin by wide margins at times, although many of those later saw their prices collapse. Gains like these might be among the most well-known cryptocurrency benefits. (The losses, on the other hand, may be among the most well-known drawbacks.) Volatility has characterized prices in the crypto space, which has been one of the key benefits of cryptocurrency for day traders and speculators.
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Privacy can be one of the benefits of cryptocurrency, but crypto isn’t as private as some people might think. Blockchains create a public ledger that records all transactions forever. While this ledger only shows wallet addresses, if an observer can connect a user’s identity to a specific wallet, then tracking transactions becomes possible.
While it’s worth noting that most crypto transactions are pseudonymous, there are ways to make more anonymous transactions. Coin mixing services group transactions together in a way that makes it hard to pick them apart from one another, confusing outside observers. Individuals who run a full node also make their transactions more opaque because observers can’t always tell if the transactions running through the node were sent by the person running the node or by someone else.
Methods like these are for more advanced users and could prove difficult for those new to crypto. So while absolute privacy is really not one of the main positives of cryptocurrency, transactions are still generally more private than using fiat currency with third-party payment processors.
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Cryptocurrency has become known as a non-correlated asset class. Crypto markets largely function independently of other markets, and their price action tends to be determined by factors other than those affecting stocks, bonds and commodities.
Any asset that has risen by millions of percentage points over just twelve years, as a number of crypto coins have, clearly is not correlated to anything else. But it’s worth noting that during the last few years, cryptos have begun to sometimes trade in tandem with stocks for short periods of time.
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Mineable cryptocurrencies with a limited supply cap, like Bitcoin, Litecoin, and Monero, to name a few, are thought to be good hedges against inflation. Because monetary inflation can occur when central banks and governments print more money, increasing the supply, things that are more scarce tend to appreciate in value.
With more and more new dollars chasing fewer and fewer coins, the price of these fixed-supply coins as measured in dollars has a higher chance of going up. Additionally, the Bitcoin protocol, for example, is also designed to keep those coins scarce regardless of what happens with monetary policy.
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Cryptocurrencies have no regard for national borders. An individual in one country can send coins to someone in a different country without any added difficulty. With traditional financial services, getting funds across international borders can take a long time and come with hefty fees. In some cases, doing so might not even be possible due to regulations, sanctions or tensions between specific countries.
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Some of the benefits of cryptocurrency extend to people who don’t have access to the traditional financial system. Due to its decentralized and permission-less nature, one of the benefits of cryptocurrency is that anyone can participate.
People don’t have to have permission from any financial authority or government to use the crypto ecosystem. (Though it’s worth noting that Bitcoin mining is banned in China.) They also don’t necessarily need to have a bank account.
There are billions of people today who are “unbanked,” meaning they have no access to the financial system, including bank accounts. With crypto, all these people need is a smartphone, and they can essentially become their own bank.
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One of the great benefits of crypto is that it can be used to exchange value between two parties. This can be done independently of any third-party, making the transaction freer and censorship-resistant.
Banks or other payment processors can choose to cut off services to anyone for any reason. This can make things difficult for some journalists, political dissidents or other individuals working in nations with oppressive government regimes. Because there is no central authority governing Bitcoin or most other cryptocurrencies, it’s very difficult to stop anyone from using them.
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Stock markets are only open on weekdays during the regular business hours of 9:30 am to 4:30 pm Eastern Time, in the case of the New York Stock Exchange (NYSE). During nights, weekends, and on holidays, most traditional financial markets are not open for business.
Crypto markets, on the other hand, trade 24 hours a day, seven days a week, without exception. Some of the only things that could interrupt a person’s ability to trade cryptocurrency would be a power outage, internet outage, or centralized exchange outage.
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The above are just a few of the most important advantages of cryptocurrency. Of course, there are potential flaws as well, its volatility being a major downside. As with anything, those interested in buying, selling and trading crypto would be wise to do their research before getting involved in the crypto market.
Learn more:
This article originally appeared on SoFi.comand was syndicated by MediaFeed.org.
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Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB, have issued public advisories concerning digital asset risk.
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