Something new is happening with Mohela student loans — and it looks like good news | Opinion

Student loan interest starts cranking up again Sept. 1. Payments start again in October. Borrowers, are you ready?

No matter your political beliefs, I bet a lot of you were on the edge of your seat, anxious to find out the results of the student debt debacle. For some of you, the decision would be a talking point — one that would fuel anti-debt relief discussions for months. For others, budget-planning finally could resume, for good or bad.

The decision came down a month ago, but something new seems to be happening with lender Mohela and at studentaid.gov.

Last week, there was a lot of celebrating going on in social media. Many borrowers reported their student loans have been forgiven or are closer to being forgiven and are breathing a sigh of relief. Seriously, I’ve never seen so many smiley-face emojis and screenshots showing a $0 loan balance.

I’m happy for these borrowers, who are public school teachers, government workers, military and nonprofit employees. Why? Because they have followed the rules, given back to their community and country, paid on time for 10 years straight and suffered through a mountain of red tape and paperwork.

I know this because I have student loans, too, and I have taught at public universities for 12 years.

Uncle Sam isn’t shy about handing out money

My student loans are from my graduate coursework. I paid off my undergraduate loans a long time ago. And yes, it felt great. For years I held on to the letter that read, “Congratulations!” Accomplishing this payoff was a stepping stone in my adulthood.

But then I went back to get a master’s degree while working full-time. Coursework dragged on and I got loans to pay for school. It was worth it, but over time interest rates grew higher than my undergraduate loan — plus, Uncle Sam wasn’t shy about handing out money.

I take full responsibility for taking Unc’s cash. But like the other public servants I’ve talked to, I paid my dues, figuratively and literally.

Before we get into the back-and-forth of whether it’s right or wrong for some hardworking people to pay off their student loans, and others be forgiven, remember that we’re talking about a Congress-approved 2007 program that has been around much longer than the Democrats’ plan to cancel student loans.

Most of the celebration is going on in the Public Service Loan Forgiveness Facebook group, formed in 2018 to build a support community of federal student loan borrowers. Member Valerie Plummer, a financial analyst wrote, “I received forgiveness on 7/21/23. I cried on the phone with the Mohela rep when she confirmed it. I’m the first to attend college in my family. I grew up poor, and college was a means to a better future. I was a single parent with 3 kids and graduated in 2013 with my MBA. I’ve been in the PSLF program the entire time, but the monthly payments were killing me. I have a great career that I wouldn’t have without my education, and I purposely stayed in not-for-profit to achieve forgiveness. This was such a relief, and I still can’t believe it.”

Group founder Christina A. Ceballos said she and 19 volunteer administrators and volunteers try to get accurate information to the more than 163,000 group members through verified crowdsourcing and research.

Ceballos recalled early loan forgiveness was slow-going and confusing. “Remember when the first group of borrowers was applying for PSLF and only 2% of all applications were approved? That’s one of the main reasons why I founded this Facebook group,” she said.

That’s right. After Congress passed PSLF and eligible borrowers applied, the rejection and denial rates were dismal.

Of course, not every one of the Facebook group’s thousands of members has been made solvent, and there are other programs that might work for those who don’t qualify for PSLF. But over the last few weeks, countless members have shared the good news. Ceballos, by her count, announced that $731 million of group member debt has been forgiven.

Loans affect well-being, say researchers

Community-minded organizations aren’t the only ones interested in PSLF borrowers. Two university researchers have documented both the financial and personal results of the loan forgiveness program. Daniel A. Collier, assistant professor at the University of Memphis and Dan Fitzpatrick, Research and Assessment Specialist at the University of Michigan, have written “Jubilee and Jubilation: An Examination of the Relationship between Public Service Loan Forgiveness and Measures of Well-Being.”

Collier said the study of more than 60 people (they are interviewing more) shows how the loan repayment pause has influenced behaviors, and what they’re doing to prepare for resuming payments. Early positive study findings include:

• Borrowers’ rates of homeownership increased linearly as they approached and arrived at cancellation.

• Borrowers’ FICO credit scores improved as they approached cancellation and jumped up after they achieved it.

• Borrowers near cancellation reported lower psychological distress, and borrowers who had achieved cancellation reported the lowest levels.

But Collier also wants to study what happens after the payments begin again, and people figure out how to budget this for the first time since before COVID-19.

There are other interested parties out there, too, and they might not be so charitable. Some companies promise to help borrowers understand and unravel the red tape of the PSLF process. Matt Amory, a public librarian in Canton, Massachusetts, said they are plentiful, and borrowers need to beware.

“Many advocacy organizations and (peer-to-peer) communities do exist to help those seeking accurate and reliable information, but crooks and liars always seem to have bigger budgets for direct-mail disinformation campaigns.”

Public schoolteachers don’t earn enough to pay back

Many of the borrowers who apply for forgiveness are public school teachers, who take on debt and whose paychecks often are not large enough to pay back these loans comfortably. Todd Fuller, communications director for the Missouri State Teachers Association, believes that PSLF is a way to help these teachers.

“We know that successful students require highly educated teachers and that comes at a cost. Teachers invest in their careers taking on debt, and our state and communities need to invest in teachers by offering a competitive salary and benefits that allows them to provide for themselves and their families, as well as pay student loans,” he said. “Until we are able to do that for every Missouri educator, offering loan forgiveness is something that could potentially help keep teachers in the profession.”

Let’s listen to a few of the teachers celebrating on X (formally known at Twitter):

“After 10+ years of teaching public speaking …, I have met all of the requirements to be eligible for Public Student Loan Forgiveness. I made my first payment in 2011 and have been on time every month for the past 12 years. As of today, I am student loan debt free! #PSLF”

- @CaylaSRios

“Got my paperwork from MOHELA at last! Good news: Received several years of PSLF credit! However, I’ve still got payments before I’m totally debt free... but as long as I’ve got life and strength, I know that I can do this. Much love to all student debtors! You are not alone.”

- @Ebonyteach

“I’m seriously not crying, what a freaking game-changer!! My PSLF just came in. #teachertwitter”

- @hoffmanteambret

I called Mohela to check on my own account and asked why debts seem to be updated and forgiven faster than before. “Because repayments are scheduled to begin soon, they are trying to move quickly and get accounts updated,” the representative said.

That’s good news for the public servants in Missouri, Kansas and elsewhere. I certainly will be keeping an eye on my Mohela account. Perhaps you should, too.