The Biden administration on Wednesday announced it’s overhauling a student loan forgiveness program that it described as “an important — but largely unmet — promise” to ease the burden of college debt on public-sector workers, including teachers, nurses and firefighters.
The sweeping changes to the Public Service Loan Forgiveness program, which will be implemented in the coming months, are expected to help at least 550,000 borrowers who have already consolidated their loans, the Department of Education estimated.
Roughly 22,000 borrowers will be immediately eligible to have their federal student loans forgiven automatically — to the tune of about $1.74 billion — according to the department’s estimates.
Another 27,000 borrowers could qualify for about $2.82 billion in debt forgiveness if they can prove they were employed in an eligible job, the government added.
“Many public servants have been on the front lines of the pandemic, making personal sacrifices to keep the rest of us safe,” the Education Department said in a fact sheet issued Wednesday.
“Nonprofits are still recovering jobs lost in the last year, and some public service workers have reported they are considering leaving public service altogether. Frontline sectors like teaching and health care are already seeing burnout and employee shortages,” the department added.
“Alleviating some of the financial strain associated with student debt can help borrowers in these sectors as they continue to navigate the fallout of this pandemic.”
Congress created the PSLF program in 2007 in a bid to lure young talent into “high-need fields” in the public workforce instead of better-paying private-sector jobs.
If young people fresh out of college were willing to pursue a career as a teacher, cop or another kind of government worker, any federal student debt they had after 10 years of public service would be forgiven.
But the program has been plagued by confusion that’s limited its usage among students. The Education Department said Wednesday that just over 16,000 borrowers have received forgiveness under the program since its inception nearly 15 years ago.
The overhaul announced Wednesday “will restore the promise of PSLF,” the department vowed.
One major hindrance to the program has been that it’s currently only available to borrowers who have a specific type of student loan, Direct Loans, from the federal government. This has led to confusion over who’s eligible for the program.
The changes announced Wednesday will temporarily allow payments on all kinds of student loans to count toward the program so long as borrowers consolidate their debt by Oct. 31, 2022.
Borrowers with loan types that previously weren’t eligible under the program will also have their payments counted if they apply for enrollment in the program by the same date, the government said.
And members of the military will now be able to count deferments and forbearances while on active duty toward forgiveness through the program, according to the Education Department.
The sweeping overhaul is the White House’s latest effort to address the nation’s growing student debt crisis.
Progressives have called on President Biden to forgive as much as $50,000 in loans per borrower as a way of cutting the nation’s estimated $1.7 trillion in student loan debt.
But the White House has so far opted for more targeted relief, forgiving loans given to those who were defrauded by now-defunct for-profit colleges, for example.
Earlier this year, Biden canceled more than $5.8 billion in federal student loan debt for over 323,000 borrowers with permanent disabilities in the single largest cancellation of debt in his presidency.
Wednesday’s overhaul could prove to have an even larger impact when the changes are rolled out in the coming months.