Student Loan Waiver Program: PSLF Changes, Explained

When Congress established it in 2007, the Public Service Loan Forgiveness program helped convince many college graduates to take lower-paying public jobs as teachers, nurses, and first responders. The government promised that if they made timely payments for 10 years, any student loan debt they still had would go away. Unsurprisingly, since then, a tonne of borrowers seeking relief told the government they had done what they were asked to do and met the PSLF loan cancellation requirements, but virtually all were turned down. (Out of 1.3 million candidates, the government paid off the debts of only 16,000 of them.)

Today, Biden’s Department of Education announcement a major overhaul to change all that and “make sure the program lives up to its promise”. The changes will immediately write off the debt of 22,000 borrowers who owe some $ 1.7 billion. The DOE says up to 27,000 other people who owe $ 2.8 billion could be eligible if they can demonstrate that additional employment spells qualify.

The changes will take place in two parts. The DOE is undertaking a serious gut renovation of the program, to make it easier to navigate. Meanwhile, the ministry is using its executive power to retroactively correct errors it has made in counting eligible borrower payments.

His ability over the years to spoil this has amazed observers. For example, borrowers obviously need to know what constitutes public service employment in the eyes of the government. The DOE website provides a fairly generic definition: “If you are employed by a US federal, state, local or tribal government or non-profit organization, you may be eligible.” But borrowers who tried to verify if theirs were eligible often did not get clear answers, as the DOE never provided an official list of eligible jobs.

Another hurdle was the repayment plans themselves: many borrowers made their payments on time, only to learn later that they did not count towards the 10-year payment requirement, as they had been made as part. of a repayment plan that their loan officer had told them qualified, but did not.

In total, the DOE estimates that more than half a million borrowers will be able to qualify for a discount sooner thanks to these changes. To take advantage of it, borrowers must submit a special waiver by October 31, 2022 – a one-time application that is used to certify their employment and then assess their eligibility for the rebate. Borrowers who currently have FFEL or Perkins loans will need to consolidate them into the direct lending program first and then submit the special waiver by that date.

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