A few days ago, I received a follow-up email notice informing me that my student loans had been forgiven. I had received notification in July that my student loans had been marked for forgiveness. However, given the history of the student loan forgiveness efforts, I took it with a pinch of salt. I'd believe it when it actually happened. This latest notice confirms that it really happened this time.
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Last month after I let Mrs. TWM know about my notice about the upcoming loan forgiveness, she didn't give it much mind. However, a few days later she called me over to her computer to read an email she received from her student loan servicer. She had not seen it since she received it in February. Her loans had been forgiven in February through another scheme known as the Public Service Loan Forgiveness (PSLF).
In case you're wondering how she would be unaware, practically all student loan borrowers have had our student loans on pause since COVID kicked off in 2020. Then there was the loan forgiveness attempt that got blocked by the SCOTUS, which extended the pause while being litigated. So, for almost three years, we have not had to make payments.
Going back to the Public Service Loan Forgiveness, both Mrs. TWM and I have worked for local governments. PSLF is directed towards government employees, teachers, and non-profit workers. After working ten years for any of these three types of employers and making payments, we could expect our loan balances to be forgiven. During the COVID pause in payments, each month still counted as making payments. Her ten years ended in February. I still had more time to go to finish my PSLF period. However, my loans were forgiven for allegedly being misled by loan servicers over the years.
Together, we are taking more than $120,000 in loans off the books. Of course, as we weren't making payments during this pause, it makes little difference to our current cash flow. However, it will be a blessing for our future cashflow as we will no longer have to divert income to pay down the loans. This changes our outlook for future finances tremendously.
Another benefit of having our loans forgiven is that they take a massive chunk of debt off of our credit reports. Mrs. TWM has already had her credit improve. I still need to wait for September, or possibly October, for my credit report to reflect the absence of the student loan debt.
The trouble with student loan debt is that, like a mortgage, it is paid in installments. You can make bigger payments, never smaller payments. If you request any deferment or other modification to help you through a rough patch, the interest gets added to the principle. If your income is not enough to cover the loans, they can become larger beasts for your future income. And, if you were to file for bankruptcy, student loans would not be affected.
While the forgiveness comes at a time when we already weren't required to make payments, it is still a relief. Payments were scheduled to resume this year. We had that dangling over our heads as I am currently unemployed. It would have been severely hurtful to us to have to make student loan payments on one income.
