Public Service Loan Forgiveness Surpasses $10 Billion in Debt Relief
The Department of Education announced this week that the federal government has eliminated approximately $10 billion in student loan debt for over 175,000 borrowers in 10 months through a government program designed to encourage people to work in public service.
In October 2021, the Public Service Loan Forgiveness (PSLF) program underwent changes that made it easier for public servants with federal student loans to seek debt relief. Coupled with the transition were temporary changes to the program's qualifications, allowing students borrowers to receive credit for payments on the Federal Family Education Loan (FFEL) Program, the Perkins Loan Program, and other federal student loans.
“For far too long, teachers, nurses, veterans, government employees, and countless others dedicated to serving our country found Public Service Loan Forgiveness to be nothing more than an empty promise,” said Education Secretary Miguel Cardona. “Today’s announcement that we’ve surpassed $10 billion in forgiveness for more than 175,000 public servants shows that…we’re committed to helping borrowers who choose to pursue careers in education, public health, social work, law enforcement, and other critical fields receive the benefits to which they’re entitled for leading lives of service.”
Borrowers must apply for a Direct Consolidation Loan before October 31, 2022 to be eligible for the temporary change; however, a coalition of lawmakers and trade associations signed an open letter urging the administration to extend the temporary change through July 1, 2023.
“For many borrowers, the Department’s one-time review to fix forbearance and deferment failures, scheduled for later this year—potentially after October 31, 2022—may be the first time that they learn that certain periods of deferment and forbearance could count toward both income-driven repayment (IDR) and PSLF programs,” wrote the lawmakers. “For many public servants, losing access to the PSLF waiver before they are able to benefit from the IDR payment adjustment could prevent them from being able to pursue forgiveness under PSLF.”
The lawmakers cited figures from the Student Borrower Protection Center, a borrower advocacy group, which estimated that only about 15 percent of the 9 million people who might be eligible for the program had applied. The lawmakers also asked for the Biden administration to increase its outreach to borrowers who might qualify.
The Education Department will host four “days of action” in the upcoming weeks to encourage public servants to take advantage of temporary program changes. The events include supplementary toolkits. Additionally, the department noted that President Joe Biden penned a letter last week informing federal employees about the changes to the program.
In a live address last week, the President also announced the elimination of up to $20,000 in federal student loans for select individuals. A single individual earning under $125,000 will qualify for the $10,000 debt cancellation. Individuals may qualify for an extra $10,000 in cancellation if they received a Pell Grant and meet income requirements. This eligibility is be based on your adjusted gross income figures from either 2020 or 2021.
The relief application is not yet available, but people can sign up to be notified when it is.