A long-time program promised to forgive federal student loans for people who have worked in public service and made loan payments for 10 years. But that’s not the way the Public Service Loan Forgiveness program, or PSLF, has worked for borrowers.
“I’ve been a federal employee since 2008, working as a wildland firefighter,” wrote Ben, an attendee in a webinar hosted Monday by U.S. Rep. Suzanne Bonamici, D-Oregon. “The PSLF program was difficult to navigate, and after a few years, I gave up on applying for relief. I still have about $12,000 in debt. Is there any relief for someone like me?”
Rep. Bonamici said frustration over PSLF has been “a story I’ve heard again and again.”
Bonamici has been advocating for improvements for years, and now, with temporary changes finally in place, borrowers like the webinar attendee named Ben should get some relief. Bonamici is urging Oregonians to take advantage.
“The Public Service Loan Forgiveness program passed back in 2007, and it was really intended to encourage students to pursue public service, and the benefit was that discharge of the balance after paying for 10 years,” Rep. Bonamici said during the webinar. “Unfortunately for many … the Public Service Loan Forgiveness was an empty promise.”
More than 600 people registered for Monday’s webinar, during which Bonamici and Mike Pierce, Executive Director of the Student Borrower Protection Center, answered questions about changes to the loan forgiveness program.
“The Biden Administration is really now finally delivering on the promise of the Public Service Loan Forgiveness program,” Bonamici said.
The U.S. Department of Education last month expanded qualification for PSLF through a new, temporary waiver program prompted by the ongoing pandemic.
“You can get your debts canceled right now, as long as you’ve been in repayment on a federal student loan — doesn’t matter what kind of federal student loan that is; it doesn’t matter whether you’re in the right kind of repayment plan,” Pierce with the Student Borrower Protection Center said in the webinar. “As long as you’ve been working full-time in public service [for 10 years], and you’ve been doing that while in repayment of a student loan, you can get your debt canceled.”
The PSLF was created as part of the College Cost Reduction and Access Act of 2007. It allows student loan borrowers who work in qualifying public service jobs, such as at a government agency or a nonprofit, to have the remainder of their loans forgiven after making 10 years of payments.
But, there were specific qualifications. Borrowers could only receive credit for the program if they were repaying “Direct Loans,” or loans directly from the federal government, rather than loans from private or other lenders.
Even after making 10 years of payments, many borrowers in public service jobs found they didn’t qualify for the program because they had the wrong type of loan or other issues.
“I heard countless stories from public sector workers diligently making payments for 10 years only to be told that they were in the wrong payment plan, or their payments didn’t count, or as one educator told me, because her school didn’t put the right stamp on her application,” Bonamici said.
In 2018, U.S. Congress funded the TEPSLF — a version of the PSLF that temporarily expanded qualification to help those borrowers who should have been eligible for the original program.
But a 2019 report from the U.S. Government Accountability Office found borrowers still had difficulty accessing the program, and that federal education officials only approved about 1% of TEPSLF applications.
Early last month, the education department widely expanded PSLF through a new, limited waiver program.
Until Oct. 31, 2022, public service workers will be able to receive credit for past periods of repayment on loans that would not usually qualify for PSLF. The waiver expands eligible loan types to include Perkins loans — federal loans that are handled through colleges and universities — and other types of student loans. Though, they will need to consolidate those loans into a direct loan by that October date.
“Our new approach will add months or years of service credit for huge numbers of student loan borrowers by counting certain payments that had been ineligible,” Richard Cordray, Chief Operating Officer of the U.S. Department of Education’s Federal Student Aid office, wrote in a letter. “In some cases, borrowers will earn full loan forgiveness based on the changes.”
There have already been some bumps in the road since the announcement of the waiver program last month. Some borrowers were still rejected under the new terms of the PSLF after the new waiver rollout, according to reporting from NPR. But, Cordray said education officials are working to iron that out.
“We also know some borrowers have received confusing information or even denials of their PSLF or TEPSLF forms since the program overhaul was announced last month,” Cordray wrote. “Without minimizing those concerns in any way, please understand these issues are temporary. In the next few months, we will review these decisions under our new approach to PSLF.”
Pierce with the Student Borrower Protection Center said in the Monday webinar that his organization estimates that one million people could be debt-free by the time the new waiver program ends next fall.
“So far, the Department of Education has canceled 30,000 public service workers’ loans — more than $1 billion of student debt owed by public service workers — and they’re just getting started,” he said.
But Pierce specified, borrowers should take the initiative to make sure they are taking advantage of the expanded forgiveness program. He noted that a key step is for borrowers to consolidate their loans before that October 2022 deadline.
“It’s not completely automatic, and that’s frustrating,” Pierce said. “But, it’s better than it was.”