Announcing major reforms to the federal student loan exemption program

A federal loan cancellation program that many people say fell short of its original intent is being revamped, the Education Department said on Wednesday.

The public service loan forgiveness program was designed to alleviate the debt of teachers, firefighters and other public service employees. If these workers were employed in the public service for 10 years and made payments on federal student loans during that time, at the end of the decade any remaining student debt would be canceled.

In practice, this has not always been the case. On Sunday, 60 Minutes reported on a group of soldiers who had had repeated difficulties in obtaining the debt relief promised by the PSLF.

On Wednesday, the Biden administration announced an overhaul of the program. The Department of Education will now offer a time-limited waiver, allowing all payments made on federal student loans to count towards the PSLF.

By expanding the program to include payments that were not previously eligible for remission, the Education Department believes it can help more than 550,000 people move closer to being released from their debts.

22,000 of those people will immediately be able to get their loans forgiven, wiping out $ 1.74 billion in debt, the federal agency said. Another 27,000 people representing $ 2.82 billion in student debt could be canceled if they prove they had qualifying employment during certain periods.

The changes could more than double the number of people who received loan forgiveness under the program. Since its creation in 2007, just over 16,000 people have benefited from credit relief under the PSLF.

“These changes are important steps towards a better and stronger PSLF program, a program that will move away from the current situation where too few borrowers receive a rebate and too many do not receive credit for the years of payments they have received. they made due to complicated eligibility rules, service errors or other technical details, ”the Education Ministry announcement said.

The action was prompted by nearly 50,000 comments the ministry received this summer following a request for suggestions on improving the program, he said.

With teachers, healthcare workers and other frontline workers experiencing burnout, the government hopes the increased financial pressure can help these public workers navigate the rest of the pandemic more easily.

“The COVID-19 pandemic has put a strain on officials, making it even more critical that borrowers can access the PSLF,” the ministry said. “Many officials have been on the front lines of the pandemic, making personal sacrifices to keep the rest of us safe. “

The waiver provided by the Department of Education will run until October 2022. It will allow all prior payments made by eligible public service employees on federal direct loans to count for the PSLF, regardless of the type of loan or payment plan.

About 60% of PSLF certified borrowers have obtained loans under the Federal Family Education Loan Program. Many FFEL beneficiaries, the education ministry said, have received inaccurate information on how to move towards the cancellation of the PSLF loan.

A report said that FFEL’s services had “systematically misled borrowers about accessing the PSLF,” the department noted. “Counting payments made on FFEL loans to PSLF will correct these problems. “

The reforms also aim to simplify the repayments of loans eligible for the PSLF. According to the ministry’s announcement, too many payments did not count for the PSLF based on technical details – borrower payments were staggered by a few cents or were overdue by a few days. The department said it would correct those issues for loan payments made before Oct.31 of this year.

Among many other changes, the overhaul seeks an easier way for military service members to qualify for loan forgiveness. By allowing months spent on active duty to count towards the PSLF, even if loans are deferred during that time, the ministry hopes it can relieve military personnel from having to think about student loans while on duty.

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