Eligibility for Public Employee Loan Forgiveness Temporarily Changed. What This Means For Borrowers

About 43 million borrowers have federal student loans. Some of these borrowers have gone on to work in public services, for example, by becoming teachers, firefighters, civil servants, or members of the military.

To strengthen public service, Congress established the Public Service Leave Program (PSLF). The Ministry of Education (Education) has made changes to the PSLF to help increase the number of borrowers eligible for forgiveness. This includes a temporary change in eligibility that expires October 31.

For this limited period, government employees (including federal, state and local), and members of the military who have federal student loans may be eligible for loan forgiveness even if they were not eligible under the previous eligibility rules. However, they steps must be taken apply these changes before time runs out.

In August, Education hearing many other opportunities for borrowers – including $20,000 in debt cancellation for some. But today’s WatchBlog post looks at the PSLF program, which is available to employees in some public service organizations..

What is the program?

Congress established the Public Employee Loan Forgiveness program in 2007 to encourage people to work in government jobs. If federal student loan borrowers pay off their loans for 10 years while working in government jobs and meeting other requirements, Education will forgive the remaining balance of their loans.

What is the effect of the eligibility changes?

While the PSLF program initially suffered from high denial rates, many borrowers have recently been able to successfully receive loan forgiveness through Education’s temporary reforms. .

Let’s go first reported on PSLF forgiveness after the first batch of borrowers qualified in 2017. At that time, when borrowers started applying for forgiveness, we learned that the PSLF program was rejection rates over 99%. Among the reasons for denial, borrowers were told they didn’t qualify because they were under the wrong loan program or had a repayment error.

In April 2021, we reported Only 287 private and military borrowers from the Department of Defense (DOD) received loan forgiveness through the program as of January 2020. The most common reasons for denial are insufficient payment approval and missing information on the application. But since then, we have seen an increase in the number of borrowers who have their loans forgiven. As of June 2022, approximately 165,000 borrowers received $10.5 billion in loan forgiveness, according to Education. This increase is due, in part, to the recent temporary change in eligibility criteria.

This limited change to the PSLF program allows borrowers to receive credit for past periods of repayment and certain periods of deferment or forbearance that they would not have otherwise been eligible for. for the program. But, as mentioned above, this change is only temporary and ends on October 31. To use the change, borrowers must take. action.

Are there any other software updates?

In our work on student loans and PSLF, we have made recommendations to the School to improve its oversight and communication about student loans.

For example, we recommend that the department make it easier for borrowers to access PSLF by providing more information about the types of employers and wages qualify for the exemption, and simplify the application process.

Schools responded to these recommendations by prepared borrowers more information about employers and wages are eligible and keep it simple the application process by creating a single application form. In April 2021, we made recommendations to increase the sharing of information about the program with DOD employees and borrowers. In response to us adviceDOD and Education have taken the first steps to work together and share information about the program that may be suitable for private and military borrowers.

Learn more about our work at PSLF by visiting us Main page on higher education opportunities and affordability and by checking the reports linked above.

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