What’s Next – Public Service Loan Forgiveness?



The Biden administration recently made significant changes to several large federal student loan programs that will ultimately result in forgiveness and cancellation of about $ 9 billion in student loans for hundreds of thousands of borrowers. But one cohort of borrowers is still waiting for help: those on track to forgive government services loans.

Changes to Biden’s student loan

Over the past few months, President Biden has used the executive branch to make major changes to several critical student loan programs:

  • Complete and permanent disability statements (TPD) allow disabled borrowers to pay off their federal student loans. But borrowers generally must submit an affirmative statement and then respond to information requests within a three-year post-discharge monitoring period, or they risk recovering their repaid loans. Biden used executive measures to waive post-discharge monitoring requirements. Initially, this change was supposed to be temporary due to the pandemic, but subsequently the Biden administration announced that the waiver of monitoring requirements would continue indefinitely. Biden also announced automatic cancellation of $ 5.8 billion federal student loans for 300,000 disabled borrowers using data matching tools with the Social Security Administration, without requiring borrowers to complete a regular TPD statement application.
  • Borrower protection from repayment The program was created to provide student loan cancellations to borrowers who were defrauded by their schools. But tens of thousands of applications were delayed, in some cases for years, while program rules were pending in federal courts. Meanwhile, some borrowers were eventually allowed to forgive student loans as part of the borrower protection program, but received only partial or minimal repayment of their debt. Biden administration recently overturned the normative guidance of the Trump era which has limited reimbursement on approved borrower protection claims. As a result, the administration announced the allocation of $ 1.5 billion. additional federal student loan forgiveness for at least 90,000 borrowers, and these numbers may increase even more in the coming months as new applications are processed.
  • Renunciation of military interests act to provide a 0% interest rate for military personnel on active duty deployed in hostile or threatening areas. But military personnel must be aware of the benefits and go through a cumbersome application process. Earlier this month, the Biden administration announced retroactive, automatic waiver of interest for qualified active and former military personnel. The Department of Education has determined, based on data exchange tools with the Department of Defense, that 47,000 borrowers will be eligible.
  • Biden’s Incentive Bill The law was passed in March and has provided colleges and universities with billions of dollars in federal financial aid. In line with a political statement from the Biden administration, schools were able to use incentive funds to write off student debts by thousands current and former students.

Forgiving a government service loan due to problems

Despite these recent initiatives, the Biden administration has yet to take any steps to address the problematic public service loan forgiveness (PSLF) program.

PSLF is a popular federal student loan forgiveness program if the borrower has worked as a full-time employee for government or nonprofit organizations for 10 years or more. However, the PSLF program has complex eligibility criteria, which limits the benefit to certain types of federal student loans and only a few repayment plans. Lawyers have also criticized the Department of Education and its contract credit institutions for poor program administration, bringing the approval rate to 2% or less since borrowers were first eligible for forgiveness in 2017. The Consumer Financial Protection Bureau recently characterized these PSLF service issues as “likely to cause significant harm” to borrowers.

Complicating matters further, PSLF’s continued processing lag, which is causing processing delays of six months or more for some borrowers, combined with imminent discontinuation of FedLoan service – Service personnel tasked with administering the PSLF program on behalf of the Ministry of Education by December.

Will Biden fix forgiving government services loans?

Advocates are calling on the Biden administration to make sweeping changes to the PSLF program, using executive measures similar to some of the changes recently made to other major federal student loan programs. Earlier this year, a coalition of over 100 consumer and borrower advocacy organizations sent letter Minister of Education Miguel Cardone, urging him to use executive measures to conduct a full audit of the PSLF program and automatically repay federal student loan debt for borrowers who have served ten or more years in the public service, regardless of their specific compliance with the PSLF’s comprehensive eligibility criteria.

The Biden administration did not respond directly to the letter. Notably, however, many of these organizations ran a similar campaign to pressure the administration to automatically write off federal student loan debt for hundreds of thousands of borrowers through the Total and Permanent Disability (TPD) program – and eventually the administration heeded it. Now more than 300,000 disabled borrowers will receive benefits.

Meanwhile, administration officials are making it clear that they are aware of the problems with the public service loan forgiveness program and are actively exploring possible solutions.

“Student loan forgiveness is getting a lot of attention, and rightfully so. And we’re going to focus on that. There are tools in our toolbox in the Department of Education that I think are not working and we need to fix them. We must work hard to make sure that the purpose of these instruments – in this case the Public Service Loan Forgiveness program – is working properly, ”Secretary Cardona said at a public event. round table PSLF programs in May. “We have a lot of work to do to make this process not only more manageable, but we still have a long way to go … to make sure that we serve our borrowers, and do not force them to overcome various obstacles in order. to get the support they were promised in 2007. I assure you that this is a priority for me. “

Further reading

Biden Automatically Cancels $ 5.8 Billion Student Loans For Over 300,000 Disabled Borrowers

Biden wants a “targeted” student loan cancellation – but what does that mean?

Biden administration begins revising income-based student loan forgiveness and repayment programs

New Federal Report: Student Loan Providers Frequently Harm Borrowers By Apologizing On Government Service Loan


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