A long-standing program promised to cancel federal student loans for people who worked in the public service and made loan payments for 10 years. But that’s not how the public service loan forgiveness program, or PSLF, worked for borrowers.
“I’ve been a federal employee since 2008, working as a wildland firefighter,” wrote Ben, a webinar participant hosted Monday by US Representative Suzanne Bonamici, D-Oregon. “It was difficult to navigate the PSLF program, and after a few years, I gave up asking for relief. I still have about $ 12,000 in debt. Is there any relief for someone like me?
Representative Bonamici said the frustration with the PSLF was “a story I have heard over and over again”.
Bonamici has been advocating for improvements for years, and now, with temporary changes finally in place, borrowers like webinar attendee named Ben should get some relief. Bonamici urges Oregonians to take advantage.
“The civil service loan forgiveness program passed in 2007, and it was really meant to encourage students to pursue civil service, and the benefit was that balance release after paying for 10 years,” said Representative Bonamici during a webinar she hosted. late Monday afternoon. “Unfortunately for many… the forgiveness of the civil service loan was an empty promise. “
More than 600 people signed up for Monday’s webinar, in which Bonamici and Mike Pierce, executive director of the Student Borrower Protection Center, answered questions about changes to the loan cancellation program.
“The Biden administration is finally keeping its promise of the civil service loan forgiveness program,” Bonamici said.
Last month, the US Department of Education broadened the qualification for the PSLF with a new temporary waiver program sparked by the ongoing pandemic.
“You can have your debt canceled now, as long as you’ve paid off a federal student loan – regardless of the type of federal student loan; it doesn’t matter if you’re on the right kind of repayment plan, ”Pierce of the Student Borrower Protection Center said during the webinar. “As long as you work full time in the public service [for 10 years], and you did it while paying off a student loan, you can get your debt canceled. “
The PSLF was created under the College Cost Reduction and Access Act of 2007. It allows student loan borrowers who hold qualifying jobs in the public service, such as in a government agency or non-profit organization, to get the rest of their loans canceled after 10 years of payments.
But, there were specific qualifications. Borrowers could only receive credit for the program if they repaid “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 that they did not qualify for the program because they had the wrong type of loan or other issues.
“I’ve heard countless stories of public sector workers diligently making payments for 10 years only to be told they were on the wrong payment plan, or their payments didn’t count, or like me. said an educator, because her school did not put the right stamp on her request, ”Bonamici said.
In 2018, the US Congress funded TEPSLF, a version of the PSLF that temporarily extended the qualification to help borrowers who should have been eligible for the original program.
But one US Government Accountability Office Report 2019 found that borrowers still had difficulty accessing the program and that federal education officials had approved only about 1% of TEPSLF applications.
At the start of last month, the education department greatly expanded the PSLF with a new limited waiver program.
Until October 31, 2022, public service workers will be able to benefit from a credit for previous repayment periods of loans that would not generally be eligible for the PSLF. The waiver extends the types of eligible loans to include Perkins loans – federal loans administered by colleges and universities – and other types of student loans. However, they will have to consolidate these loans into a direct loan by that October date.
“Our new approach will add months or years of credit service for a large number of student loan borrowers by counting certain payments that were not eligible,” wrote Richard Cordray, chief operating officer of the federal office of student aid from the US Department of Education. a letter. “In some cases, borrowers will get full loan forgiveness based on the changes. “
There have already been a few bumps in the road since the waiver program was announced last month. Some borrowers were still rejected under the new PSLF terms after the rollout of the new waiver, according to NPR reports. But, Cordray said education officials are working to fix this problem.
“We also know that some borrowers have received confusing information or even denials of their PSLF or TEPSLF forms since the program redesign was announced last month,” Cordray wrote. “Without minimizing these concerns in any way, please understand that these issues are temporary. Over the next few months, we will be reviewing these decisions as part of our new approach to the PSLF. “
Pierce with the Student Borrower Protection Center told Monday’s webinar that his organization estimates that one million people could be debt-free by the end of the new waiver program next fall.
“So far the Department of Education has canceled 30,000 loans to public service workers – over $ 1 billion in student debt owed by public service workers – and they’re just getting started.” , did he declare.
But Pierce clarified that borrowers need to take the initiative to ensure they take advantage of the expanded forgiveness program. He noted that a key step is for borrowers to consolidate their loans before this October 2022 deadline.
“It’s not completely automatic, and it’s frustrating,” Pierce said. “But it’s better than before.”