Biden Administration Makes Student Loan Forgiveness Program Easier to Use

The Education Department on Wednesday announced plans to overhaul a financial incentive program aimed at encouraging public service, including federal employment, that has been beleaguered by convoluted rules and Republican efforts to axe it altogether.

The Public Service Loan Forgiveness Program, established in 2007, offered college students a deal: if you work in government or for qualifying nonprofits and make your monthly student loan payments for a decade, the federal government will forgive your remaining loan balance.

But in practice, the program proved to be a headache both for borrowers and the government. Many public servants’ access to the program has been in limbo after they discovered that they had paid the wrong amount in monthly payments or had taken out the wrong kinds of student loans. Compounding the uncertainty, each of former President Trump’s annual budgets proposed canceling the program altogether.

On Wednesday, the Education Department announced plans to reform the program to ensure people who made a good faith effort to abide by its terms are approved for loan forgiveness, as well as to simplify the program going forward for future borrowers.

The first step is the establishment of a temporary waiver to ensure that federal workers and other public servants who have tried to abide by the program’s terms can access its benefits. Between now and Oct. 31, 2022, borrowers will have a chance to consolidate their loans into the correct Direct Loan program.

“Counting prior payments on additional types of loans will be particularly important for borrowers who have or had loans from the Federal Family Education Loan program,” the department said in a press release. “Around 60% of borrowers who have certified employment for PSLF fall into this category. Many FFEL borrowers report receiving inaccurate information from their servicers about how to make progress toward PSLF, and a recent report by the Consumer Financial Protection Bureau revealed that some FFEL servicers have systematically misled borrowers on accessing PSLF.”

Additionally, the waiver will apply to prior payments that had previously not qualified for the public service loan forgiveness program due to the program’s overly strict rules. The department said that in some instances, borrowers’ payments did not count toward the program because of payments that were miscalculated by a penny or considered late by mere days.

The department also said it would conduct a review of borrowers’ applications that have previously been denied, and work to correct processing errors.

Permanent changes are also in the offing. Military service members will be credited for their time on active duty, even though their loans are technically considered on a deferment or in forbearance during these periods. And the Education Department will cross reference its data with information from federal agencies and military service branches to automatically certify federal employees and service members’ employment so that their time in government counts towards the program.

Moving forward, the department said it will issue new regulations aimed at simplifying the rules around monthly payments, and it will simplify the application process and better clarify what organizations qualify for the program.

The department has launched a new online tool to help borrowers apply for the program; an FAQ about the temporary waiver is also available at studentaid.gov.