Education

Biden Administration To Change The Student Loan Forgiveness Program To Include More Public Sector Workers

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Kendall Tietz Education Reporter
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President Joe Biden’s administration’s Education Department announced plans Wednesday to overhaul its loan forgiveness program to provide further debt relief to public sector workers.

Under the changes, public sector workers will qualify for debt relief more easily to further assist the over 550,000 borrowers enrolled in the program, the Education Department said. Enacted in 2007, the Public Service Loan Forgiveness (PSLF) program cancels loans of public servants like teachers, nurses and firefighters after 10 years of public service with the goal of recruiting more workers for “high-need fields” and allowing borrowers to stay in their jobs.

A borrower must work in a public sector job and make 120 on-time debt payments in order to qualify for forgiveness under the plan, The Wall Street Journal reported. PSLF is only available to borrowers who have Direct Loans from the federal government, a fact which sometimes confuses borrowers.

Borrowers have previously been allowed to consolidate other loans into Direct Loans, but payments predating that consolidation aren’t considered for qualification for PSLF, the WSJ reported.

A limited waiver, outlined in Wednesday’s announcement, will temporarily allow payments of all loan types to qualify for PSLF so long as borrowers consolidate their student debt by Oct. 31, 2022.

“This Limited 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 into the Direct Loan Program while the waiver is in effect,” the Department said.

“Borrowers who devote a decade of their lives to public service should be able to rely on the promise of Public Service Loan Forgiveness,” Education Secretary Miguel Cardona said. “The system has not delivered on that promise to date but that is about to change.” (RELATED: Biden Administration Plans To Cancel $5.8 Billion More In Student Loan Debt)

Only 5,500 borrowers have had their debt completely wiped under PSLF due to rules that have “spawned much confusion and frustration,” according to a June Education Department publication, the WSJ reported.

America’s largest labor union, the National Education Association, praised the PSLF overhaul, which “could not have happened without the activism of more than 48,000 NEA members who sent letters and public comments to ED regarding the broken PSLF program,” the statement said.

The changes will also allow active duty service members to count deferments and forbearances and review denied PSLF applications for errors in order to reconsider their eligibility, according to the Department.

The Education Department will contact borrowers about the changes, how they can benefit and the actions they might need to take for eligibility.

In August, the Biden administration extended the pandemic-related moratorium on student loan repayment, interest and collection to January 2022. In June, the administration said it would forgive $500 million in loans of the now-defunct ITT Technical Institute.

“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 Department said.

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