The Public Service Loan Forgiveness Program has granted over 615,000 public service workers $42 billion in student loan forgiveness since October 2021.
The U.S. Department of Education highlighted the Biden administration's efforts to promote the use of the Public Service Loan Forgiveness program, which is being presented as an alternative option to President Biden's broader student debt forgiveness plan of up to $20,000 per borrower.
The White House is also working to increase access to income-driven repayment plans and promote the PSLF program as a viable alternative.
Public Service Loan Forgiveness
According to ABC, the PSLF program was established by Congress in 2007 to assist government and not-for-profit employees by forgiving their student loan debt after ten years of payments (120 total payments).
The idea behind this program was to encourage people to work in public service, a sector where salaries are generally lower than those in the private sector, by easing their financial burden and incentivizing them to continue to serve the public.
However, despite the program's good intentions, it was poorly implemented.
The approval rate among applicants was low, with only around 7,000 borrowers receiving forgiveness before 2021.
As per U.S. Education Undersecretary James Kvaal, many borrowers were unsuccessful in receiving forgiveness due to the wrong type of loans or using ineligible repayment plans, such as bank-based loans made with federal subsidies.
For years, borrowers were making payments under PSLF, thinking they were making progress towards debt cancellation, but the fine print of the program prevented them from receiving forgiveness.
In response to these issues, the Biden administration issued a one-year limited waiver in October 2021 to temporarily change the rules of PSLF.
The waiver addressed some of the program's shortcomings and made it easier for borrowers to qualify for forgiveness.
The Education Department stated that the Biden administration's changes, including the temporary waiver, have greatly expanded the use of the program.
The changes aim to make it easier for public service workers to receive forgiveness by counting all previous payments made by eligible applicants who didn't file the right forms or didn't do so on time.
The Education Department hopes that this change will encourage more people to pursue careers in public service, knowing that they can receive financial support to manage their student loan debt.
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Qualifying for PSLF
Although the temporary waiver for PSLF has expired, the program remains available to eligible public service employees.
The Hill reported that to qualify for debt forgiveness under PSLF, applicants must be employed full-time by a U.S. federal, local, state, or tribal government or not-for-profit organization, including U.S. military service, and have direct loans or consolidate other federal student loans into a direct loan.
In addition, applicants must make 120 qualifying payments towards their loan.
Student Loan Forgiveness
President Biden has pledged to alleviate the burden of student loan debt, which currently stands at $1.6 trillion and is rapidly increasing for over 45 million borrowers.
Middle-class borrowers often face high monthly payments and growing balances, while those who are most vulnerable are severely impacted by debt.
To fulfill his campaign promise, Biden proposed a loan cancellation plan in August 2022, with a plan to start forgiving loans in October.
According to the White House, the program would forgive up to $10,000 of federal student loan debt for borrowers who make under $125,000 per year or $250,000 as a married couple, with an additional $10,000 forgiven for those who received Pell grants, which are awarded to low-income families.
