Administration

Biden administration overhauls student loan forgiveness program

The Department of Education on Tuesday announced it would temporarily allow student borrowers to claim credit on all federal loan and repayment programs toward forgiveness.

The agency said it was doing so to “restore the promise” of the Public Service Loan Forgiveness (PSLF) program, which cancels student loans for individuals who have worked in qualifying public service for 10 years and made 10 years worth of payments on federal loans.

The program was designed to reward public service, but the Education Department said that this promise often went “unmet.”

Called a limited PSLF waiver, the change will expand the types of payments that student borrowers working in public service can count toward student loan forgiveness and will apply to those with direct loans, have consolidated into the direct loan program or submitted an application into the direct loan program while the waiver is in effect.

The agency estimated that this temporary waiver will help more than 550,000 borrowers and will allow for roughly 22,000 borrowers to be eligible to have their loans discharged automatically.

On top of this waiver, the Education Department stated that it will be reviewing “all denied PSLF applications and PSLF processing practices” in order to address errors and will be seeking to simplify the PSLF process.

The waiver will last until Oct. 31, 2022. 

The Education Department recommended that borrowers see what type of loans they have by going to StudentAid.gov and navigating to the “My Aid” page, acknowledging that many borrowers don’t actually know what types of loans they have.

The PSLF program has long been criticized for being overly complicated with many missteps and errors in the program often resulting in public service workers being denied loan forgiveness. As The Associated Press noted, more than 90 percent of applicants to PSLF are rejected, leaving many borrowers stuck with debt that they believed would be forgiven after a certain point.

In his 2021 budget proposal, former President Trump had sought to end the program, having proposed shutting it down for most of the years he was in office. 

Tags Donald Trump Education in the United States Federal Perkins Loan Finance Public Service Loan Forgiveness Student loan Student loans in the United States

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