The Public Service Loan Forgiveness program was intended to provide debt relief to teachers, firefighters and other public employees. If those workers took a public service job for 10 years, and made payments on federal student loans during that time, at the end of the decade any remaining student debt they had would be forgiven.
In practice, that was not always the case. On Sunday, 60 Minutes reported on a group of service members who had repeated trouble achieving the debt relief they were promised by the PSLF.
On Wednesday, the Biden Administration announced an overhaul of the program. The Department of Education will now offer a limited-time waiver, allowing any payments made on federal student loans to count toward the PSLF.
By expanding the program to include payments not previously eligible for forgiveness, the Education Department believes it can help more than 550,000 people move closer to becoming debt free.
22,000 of those people will immediately be able to have their loans forgiven, erasing $1.74 billion in debt, the federal agency said. Another 27,000 people representing $2.82 billion of student debt could be forgiven if they prove they had an eligible job for certain periods.
The changes could more than double the number of people who have received loan forgiveness through the program. Since its creation in 2007, just over 16,000 people have received loan relief under the PSLF.
“These changes are important steps toward a better and stronger PSLF program, one that will move away from the current situation in which too few borrowers receive forgiveness, and too many do not receive credit for years of payments they made because of complicated eligibility rules, servicing errors or other technicalities,” the Education Department announcement said.
The action was generated by nearly 50,000 comments the department received this summer following a request for suggestions on improving the program, it said.
With teachers, healthcare workers and other frontline employees seeing burnout, the government hopes elevating their financial strain can help these public employees more easily navigate the remainder of the pandemic.
“The COVID-19 pandemic has placed a tremendous strain on public servants, making it even more critical that borrowers are able to access PSLF,” the department said. “Many public servants have been on the front lines of the pandemic, making personal sacrifices to keep the rest of us safe.”
The waiver provided by the Education Department will run through October of 2022. It will allow any prior payments that qualifying public service employees made on federal direct loans to count toward PSLF, regardless of the type of loan or payment plan.
About 60 percent of borrowers certified for PSLF had loans through the Federal Family Education Loan program. Many FFEL recipients, the Education Department said, have received inaccurate information on how to make progress on toward PSLF loan forgiveness.
One report said FFEL servicers had “systematically misled borrowers on accessing PSLF,” the department noted. “Counting payments made on FFEL loans toward PSLF will correct these issues.”
The reforms also aim to simplify which loan payments qualify for PSLF. Too many payments, the department’s announcement said, have not counted for PSLF based on technicalities — borrowers’ payments were off by a matter of cents, or were late by a few days. The department said it will correct these issues for loan payments made before Oct. 31 of this year.
Among many other changes, the overhaul seeks an easier path for military service members to qualify for loan forgiveness. By allowing months spent on active duty to count toward PSLF, even if loans are being deferred during that time, the department hopes it can relieve military members from having to think about student loans during their service.
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