Upcoming student loan forgiveness/consolidated loans
February 12, 2021 2:51 AM   Subscribe

Does anyone know anything about the upcoming loan forgiveness? My four federal/gov loans just* moved into "closed" status, for potential consolidation. I'm concerned I made them ineligible for forgiveness. It may be too early to tell.

They have not been consolidated, yet. I'm still in-process. Is it possible to reverse the process? Forward them into a verifiable "government loan"(?) (since only federal loans will be forgiven). The company is National Securities/the default government company, before folding into a single private loan (?).
posted by firstdaffodils to Education (10 answers total) 2 users marked this as a favorite
There is no concrete info about a mass loan forgiveness, it is only a desire by certain politicians. There are not even any rough proposals yet. There would be a lot of details to work out if they decided to move forward, which hasn't happened yet.

Many students don't have a choice of who originates their loans, so any policy that cancelled loans from certain providers but not others would make lots of people angry. Which is one of the many thorny issues that would make this extremely difficult to accomplish.

I find it extremely unlikely to ever happen, so I would work out a financial plan that is most advantageous to you that does not rely on any forgiveness or cancellation. Interest rates are low right now, so a consolidation loan to a lower rate may be the smartest thing to do right now, but I don't know the details of your situation or have a crystal ball.
posted by TheAdamist at 3:11 AM on February 12 [4 favorites]

I'm a little unclear on the nature of your current loans. Most federal student loans are in payment suspension, with a 0% interest rate. I'm wondering if your loans are an exception, since you're going through the trouble of consolidating with a private lender?

Assuming that you do have federal loans that are currently in suspension, I agree with the advice in this article. There's essentially no downside to waiting to see what happens in terms of federal student loan policy. Additionally, federal loans come with borrower protections that you'll lose if you consolidate with a private lender.

I have no idea how to pause the consolidation process you've begun, but I would talk to your current loan servicer.

If you do decide to consolidate down the road, you can do so through the Department of Education. You might not get as competitive an interest rate as with a private lender, so you'll have to weigh the benefits and risks.

(As far as what forgiveness could look like, $10,000 seems to be the number that's being discussed. I'm fairly sanguine about forgiveness happening on this scale, but I think your instincts are correct - we can be pretty certain that it won't apply to private student loans.)
posted by toastedcheese at 5:22 AM on February 12 [3 favorites]

I'm not an expert, just a medical resident with a lot of loans and a nasty private loan in my past, but I wouldn't consolidate any government loan(s) into a private loan. You lose a lot of benefits, like income-dependent payment, deferment, and forbearance. This is totally independent of any question of forgiveness (don't hold your breath) or current 0% interest (a nice perk).
posted by 8603 at 5:55 AM on February 12 [10 favorites]

I've been enrolled in the ill-fated Public Service Loan Forgiveness (PSLF) program since its inception--so, to the naysayers, of course loan forgiveness programs are possible. I wouldn't plan on it, though, because there's nothing to plan on right now other than comparing to existing forgiveness programs like PSLF.

To qualify for PSLF, I paid off my private loans and consolidated my government loans into a loan owned by the servicer chosen by the Department of Education to oversee the PSLF program. I technically qualified for forgiveness something like two years ago, but Obama never finalized the part of the program that said exactly how the forgiveness would be triggered, and then the DeVos DOE ignored the program while trying to kill it. So perhaps pay attention to PSLF-related developments under Biden for an idea of what's coming next. Otherwise, yes, keep your government loans as government loans. Under no circumstances should you "pay off" a government loan by taking our a private loan. The new administration is already creaking open the PSLF door--there's been an update added alerting people to the possibility of a workaround solution to arcane rules about what constitutes qualification for the program, which seems to have been a loophole used by DOE to invalidate loan forgiveness for a lot of people who'd been in the program for the decade it takes to qualify.
posted by late afternoon dreaming hotel at 9:24 AM on February 12 [3 favorites]

Response by poster: No dependency on outcome (of course), just looking for details! Thanks so much, great so far!
posted by firstdaffodils at 9:40 AM on February 12

I technically qualified for forgiveness something like two years ago, but Obama never finalized the part of the program that said exactly how the forgiveness would be triggered

You need to trigger the PSLF loan forgiveness:

After you Make 120 Qualifying Monthly Payments for PSLF
After you make your 120th qualifying monthly payment for PSLF, you’ll need to submit the PSLF form to receive loan forgiveness. You must be working for a qualifying employer at the time you submit the PSLF form and at the time the remaining balance on your loan is forgiven.

-- To answer the OP: The Biden administration has been making a lot of noise about wanting to cancel some amount of federal student loans; initially Biden was very clear that he thought $10,000 was a reasonable number, but Schumer and Warren and others have been pushing for $50,000. There's been enough talk about it that I expect that something will pass within the year.
posted by Theiform at 10:30 AM on February 12 [3 favorites]

Response by poster: (in all honesty, I think $10K will* pass. I've been following well, I'm constantly looking for information I missed)
posted by firstdaffodils at 11:23 AM on February 12

I technically qualified for forgiveness something like two years ago, but Obama never finalized the part of the program that said exactly how the forgiveness would be triggered, and then the DeVos DOE ignored the program while trying to kill it.

The application for forgiveness has been online since late 2017/early 2018. People--albeit in very small numbers--have been receiving forgiveness since then. You need to apply for it. I hope you're still employed by a qualifying employer.
posted by praemunire at 11:42 AM on February 12 [2 favorites]

I got my loans forgiven under PSLF. It is possible.
posted by notjustthefish at 8:58 PM on February 12 [2 favorites]

Reddit StudentLoans is actually a good source of info--I heard about it on here.
posted by 8603 at 7:11 AM on February 13

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