More than half a million public service workers and employees of nonprofits might receive student debt loan relief, per an overhaul of the Public Service Loan Forgiveness Program (PSLF) announced today by the U.S. Department of Education (DoE).
The PSLF program was established to provide debt relief in support of firefighters, nurses, teachers and other community workers. Through the program, some loans are canceled after 10 years of public service. The program was established to enable these workers to stay in their jobs and entice others to join high-need fields.
The changes will be available to borrowers who have direct loans, Federal Family Education Loans, and Perkins Loans. The waiver applies to loans taken out by students.
“The COVID-19 pandemic has placed a tremendous strain on public servants, making it even more critical that borrowers are able to access PSLF,” DoE leadership announced in a Fact Sheet about the expanded loan forgiveness program. “Many public servants have been on the front lines of the pandemic, making personal sacrifices to keep the rest of us safe. Nonprofits are still recovering jobs lost in the last year, and some public service workers have reported they are considering leaving public service altogether. Frontline sectors like teaching and healthcare are already seeing burnout and employee shortages. Alleviating some of the financial strain associated with student debt can help borrowers in these sectors as they continue to navigate the fallout of this pandemic.”
Under the new terms, 22,000 borrowers who have consolidated loans, including previously ineligible loans, have become immediately eligible for $1.74 billion in forgiveness without the need for any action on their part. Another 27,000 might qualify for an additional $2.82 billion in loan forgiveness if they can certify additional periods of employment. In total, the DoE estimates more than 550,000 borrowers who had previously consolidated loans could see an increase in qualifying payments of some sort, with the average borrower seeing two years of progress toward loan forgiveness.
Prior to the program expansion only around 16,000 individuals had received relief under the PSLF program. Under the expanded provisions, the DoE will:
* Offer a temporary opportunity for borrowers to get credit for payments they have made that would not otherwise count toward PSLF. Any prior payments made while working for a qualifying employer will count, regardless of loan type or repayment plan. This aspect of the program will run through Oct. 31, 2022. Additional information, including how to determine who is qualified and additional information and actions needed, is available here: https://bit.ly/3ljuUEC;
* Simplify the technical requirements around payments. Previous stringent requirements have resulted in some payments not being previously credited toward the PSLF payments needed for forgiveness;
* Expand credit for military service time toward the ten years of service required for program participation;
* Automatically help military service members and other federal employees access the PSLF program;
* Review denied PSLF applications with an eye toward identifying and correcting errors in PSLF processing. According to the DoE, this change stems from a settlement PHEAA, the student loan servicer responsible for processing PSLF payments, entered into with the Massachusetts Attorney General;
* Improve outreach and communication with PSLF-eligible borrowers; and,
* Simplify the PSLF application process, including working with labor unions, local governments, school districts and state education agencies, among other organizations, to improve the database of qualifying employers and enable automated enrollment for certain government employees.
The changes to the PSLF will be rolled out during the upcoming months. Additional information about consolidating loans is available here: https://bit.ly/3uP5Wjt