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Senator Proposes Big Changes To Student Loan Forgiveness

A U.S. senator has proposed significant changes to student loan forgiveness.

Here’s what you need to know — and what it means for your student loans.

Student Loans

U.S. Senator Bob Menendez (D-NJ) and Congressman Donald Norcross (D-NJ) today proposed the Second Chance At Public Service Loan Forgiveness Act, which would fix the troubled Public Service Loan Forgiveness program. The new, proposed legislation would, among other things:

  • Allow public servants with student loans or public service before 2007 (the year Congress created the program) to qualify for student loan forgiveness;
  • Eliminate the 120-payment requirement and instead require ten years of public service employment;
  • Expand the current limited waiver for student loan forgiveness beyond October 31, 2022;
  • Permit Parent PLUS Loans to qualify for public service loan forgiveness;
  • Allow that contract-based, educational public servants as well as adjunct, contingent, or part-time higher education faculty become eligible for PSLF; and
  • Allow for teachers to qualify for both the Teacher Loan Forgiveness Program and public service loan forgiveness simultaneously.

“From day one, the Public Service Loan Forgiveness Program has been plagued with issues and inadequate oversight, resulting in less than ten percent of applicants being approved for loan forgiveness despite their dedicated service to our nation,” Menendez said. Currently, public servants can get total federal student loan cancellation when they work full-time for a qualified non-profit or public service employer and make at least 120 monthly student loan payments.


Major changes to student loan forgiveness

This proposal follows other major proposals to make student loan forgiveness more accessible to student loan borrowers. For example, Biden has proposed major changes to student loan forgiveness. Two senators in Congress also have introduced legislation to change student loan cancellation. Collectively, these proposals include the following:

  • Student loan repayment plans: count student loan payments made under any student loan repayment plan or student loan type;
  • Student loan consolidation: count student loan payments made prior to student loan consolidation, even if you were on the wrong repayment plan;
  • Late payments: count student loan payments that were late or were partial student loan payments;
  • Limited waiver for student loan forgiveness: make the limited waiver permanent so that more student loan borrowers eligible; and
  • Fewer requirements for public service: make public service loan forgiveness achievable in five years rather than 10 years.

For any of these proposals to become reality, Congress and the president would pursue different paths. For example, Congress would need to pass legislation, which could include “combining” different proposals into one piece of legislation. Separately, Biden could use the rule-making process through the U.S. Department of Education to implement his proposed changes. Currently, the public can comment on Biden’s proposals, with final rules expected in November, and implementation by July 1, 2023. In addition to potential reforms to student loan forgiveness, Biden is considering wide-scale student loan cancellation for millions of student loan borrowers. In the coming weeks, Biden has three deadlines for student loan forgiveness. The president confirmed yesterday that he will make a decision on student loan forgiveness by August. On August 31, 2022, the student loan payment pause will end, which means student loan borrowers will be required to make federal student loan payments again beginning on September 1. Make sure you explore all your options for student loan repayment, including these smart ways to save money:


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