Education Department: 110,000 People in Public Service Have Student Loans Forgiven
The PSLF program—first signed into law by former President George W. Bush in 2007—allows nonprofit and government employees to have their federal student loans wiped out after ten years or 120 total qualifying payments.
Due to policy changes announced by the Biden administration last year, the troubled Public Service Loan Forgiveness Program (PSLF) is now giving more than 110,000 people with student debt roughly $6.8 billion in relief, according to new figures from the U.S. Department of Education.
As reported by CNBC, “hundreds of thousands more could still see their debt discharged as part of the effort,” with the “average amount of debt reduction per borrower … close to $60,000.”
The PSLF program—first signed into law by former President George W. Bush in 2007—allows nonprofit and government employees to have their federal student loans wiped out after ten years or 120 total qualifying payments. According to the Consumer Financial Protection Bureau, an estimated 25 percent of American workers could be eligible for the program.
However, “for years, the PSLF program was hampered by complicated eligibility criteria and poor administration and oversight by the Education Department and its contracted student loan servicers,” Adam S. Minsky, an attorney focused on helping student loan borrowers, wrote in Forbes. “As a result, the program experienced extraordinarily high denial rates of 98-99 percent.” Then last October, the Biden administration decided to establish a temporary new program that would “dramatically expand PSLF relief.”
“Called the ‘Limited PSLF Waiver,’ this initiative dramatically expands access to student loan forgiveness under PSLF by allowing many more kinds of payments and federal student loans to qualify,” Minsky added. “In addition, last month the Biden administration announced sweeping fixes to Income-Based Repayment programs, which will also benefit tens of thousands of borrowers seeking loan forgiveness through PSLF.”
Furthermore, in March, the Biden administration confirmed that it would introduce a new appeal and reconsideration process for borrowers who were denied relief via the PSLF program. “With (an) online process, you will be able to submit one or more reconsideration requests through StudentAid.gov and upload documentation for review and consideration by Federal Student Aid (FSA) officials,” the Education Department said in the announcement, per Forbes.
Mark Kantrowitz, a higher education expert, told CNBC that individuals seeking debt relief should take action now considering the fact that the Biden administration’s new rules for the PSLF program are set to expire on October 31.
For example, for those who have either a Federal Family Education Loan (FFEL) or a Federal Perkins Loan, they will need to consolidate them into direct loans with their servicer.
“It typically takes thirty days to forty-five days for the consolidation to occur,” Kantrowitz said. “Borrowers should do this even if they don’t expect to have 120 payments by the deadline, as the previously ineligible payments will count only if they do this,” he continued.
Ethen Kim Lieser is a Washington state-based Finance and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.