A huge expansion of a critical student loan forgiveness program is set to end in just a few months. Meanwhile, millions of borrowers may still not even know that the new program exists. Student loan borrower advocacy groups and labor unions are now urging President Biden to extend it.
Here’s the latest.
Student Loan Forgiveness Expanded for Borrowers Working In Public Service
In October, the Biden administration announced a sweeping, temporary expansion of the Public Service Loan Forgiveness (PSLF) program. PSLF can eliminate the federal student loan debt for borrowers who devote their careers to nonprofit or government work. Ten years of service can result in complete student loan forgiveness.
But the PSLF program was long-plagued by complex eligibility requirements, administrative problems by servicers, and poor oversight by the Department of Education. The result was an anemic approval rate that never really eclipsed 2%.
Through the new “Limited PSLF Waiver” program, the Biden administration has temporary eased several key PSLF requirements and restrictions. Through this waiver, the Department of Education will be able to retroactively count prior periods of loan repayment that would have otherwise been rejected under the original PSLF rules, including payments made under non-qualifying federal student loan repayment plans or on non-Direct federal loans.
A subsequent, similar temporary initiative announced in April to reform income-driven repayment (IDR) plans will also allow certain periods of deferments and forbearances to count towards PSLF, as well.
Taken together, the changes to PSLF and IDR will potentially allow hundreds of thousands of borrowers to obtain billions of dollars in student loan forgiveness. And according to the Department of Education, over $7 billion in student loan forgiveness has already been awarded since the changes were announced. Much of that has been through automatic student loan forgiveness for borrowers who already have Direct-program federal student loans and have already certified their employment by submitting PSLF employment certification forms.
But many other borrowers will have to take action to benefit from the changes. Student loan borrowers with FFEL-program student loans — an older loan program whereby private lenders disbursed federal student loans that were ultimately insured by the government — would need to consolidate those loans through the federal Direct consolidation loan to be eligible for the Limited PSLF Waiver. And borrowers who have not yet certified their public service employment by completing and submitting PSLF employment certification forms would need to do so, as well.
The Limited PSLF Waiver ends on October 31, 2022 — less than four months from now. And given that the Direct consolidation process can sometimes take a couple of months, borrowers who don’t know about the temporary initiative or have not taken action yet are increasingly at risk of missing the boat on student loan forgiveness.
Advocates Call For Extension of the Limited PSLF Waiver
The Student Borrower Protection Center (SBPC), an organization that advocates for student loan borrowers, released new data on Thursday suggesting that millions of borrowers may be eligible for relief through PSLF but have not yet had their student loans forgiven. Given the possibility that many borrowers will be left out of relief under the Limited PSLF Waiver, advocacy groups 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 needs to recognize that you can’t have too much of a good thing — extend the [PSLF] waiver now and deliver debt relief for millions in the future.”
A coalition of labor unions echoed these sentiments. “The Limited PSLF Waiver marks a once-in-a-generation opportunity for our educators to access student debt cancellation,” said Becky Pringle, President of the National Education Association (NEA), one of the nation’s largest teacher’s unions. “However, its rollout was fast, and by the time public servants figured out the new temporary rules, the program was halfway done… Educators and public service workers need more time to get forgiveness they deserve.”
“Public service workers devote their lives and careers to keeping our communities safe, healthy and strong,” said AFSCME President Lee Saunders. “But many of their jobs require a college or even an advanced degree, which has plunged 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 should not be locked into a never-ending spiral of student loan debt. We owe it to these everyday heroes to ensure that every eligible borrower gets access to the relief they have earned for their service to our communities.”
So far, the Biden administration has not given any indication whether an extension of the Limited PSLF Waiver is under consideration.