A huge expansion of a critical student loan forgiveness program is set to end in just a few months. Meanwhile, millions of borrowers may not even know the new program exists. Student borrower advocacy groups and unions are now urging President Biden to extend it.
Here is the latest.
Student loan forgiveness extended to borrowers working in the civil service
In October, the Biden administration announced a sweeping, temporary expansion of the Public Service Loan Forgiveness Program (PSLF). PSLF can eliminate federal student loan debt for borrowers who dedicate their careers to nonprofit or government work. Ten years of service can result in full student loan forgiveness.
But the PSLF program has long been plagued by complex eligibility requirements, administrative problems by service agents and poor oversight by the Department of Education. The result was an anemic approval rating that never really exceeded 2%.
Through the new “Limited PSLF Waiver” program, the Biden administration has temporarily relaxed several key PSLF requirements and restrictions. With this waiver, the Department of Education will be able to retroactively count prior loan repayment periods that would otherwise have been disallowed under the original PSLF rules, including payments made under federal student loan repayment plans. ineligible or on non-direct federal loans. .
A subsequent similar temporary initiative announced in April to reform Income Contingent Repayment (IDR) plans will also allow certain deferral and forbearance periods to also count towards the PSLF.
Taken together, the changes to the PSLF and IDR will potentially enable hundreds of thousands of borrowers to obtain billions of dollars in student loan forgiveness. And according to the Department of Education, more than $7 billion in student loan forgiveness has already been granted since the changes were announced. Much of this has been achieved through automatic student loan forgiveness for borrowers who already have direct program federal student loans and who have already certified their employment by submitting PSLF employment certificate forms.
But many other borrowers will need to take action to benefit from the changes. Student loan borrowers with student loans from the FFEL program — an older loan program where private lenders disbursed federal student loans that were ultimately government-insured — would need to consolidate those loans through the loan. Federal Direct Consolidation to be eligible for the limited PSLF exemption. And borrowers who have not yet certified their government employment by completing and submitting the PSLF employment certification forms should do so as well.
The limited PSLF waiver ends on October 31, 2022 – in less than four months. And since the direct consolidation process can sometimes take a few months, borrowers who are unaware of the temporary initiative or who have not yet taken action are increasingly at risk of missing the boat on cancellation. of the student loan.
Advocates seek extension of limited PSLF waiver
The Student Borrower Protection Center (SBPC), an organization that defends student borrowers, published new data on Thursday suggesting millions of borrowers may be eligible for relief through the PSLF but have not yet had their student loans forgiven. Given the possibility that many borrowers will be excluded from relief under the limited PSLF waiver, advocacy groups have called on the Biden administration to extend the program beyond the October deadline.
“The Biden administration is delivering a debt-free future for public service workers across the country, but we’ve only scratched the surface,” said SBPC Executive Director Mike Pierce in a statement. “Secretary Cardona must recognize that you can’t have too much of a good thing – prolong the [PSLF] give up now and provide debt relief to millions in the future.”
A coalition of unions echoed those sentiments. “The limited PSLF exemption represents a unique opportunity for our educators to access student debt forgiveness,” said Becky Pringle, president of the National Education Association (NEA), one of the largest unions teachers in the country. “However, its rollout was rapid, and by the time officials understood the new temporary rules, the program was halfway done…Educators and public service workers need more time to get the pardon they deserve.”
“Public service workers dedicate their lives and careers to keeping our communities safe, healthy and strong,” said AFSCME President Lee Saunders. “But many of their jobs require a university degree or even an advanced degree, which has pushed many public service workers into debt. You don’t get into public service to get rich, and those who step up and put their communities first shouldn’t be locked into an endless spiral of student debt. We owe it to these everyday heroes to ensure that every eligible borrower has access to the relief they have earned for their service to our communities.
So far, the Biden administration has given no indication whether an extension of the limited PSLF waiver is under consideration.
Further Reading on Student Loans
560,000 borrowers will get automatic student loan forgiveness, but others can still apply for relief
Biden Reportedly Close to Making a Decision on Widespread Student Loan Forgiveness – Here’s Where It Stands
Biden’s new student loan forgiveness changes could end up costing some borrowers
If Biden enacts a broad student loan waiver, it could look like this