On Wednesday, the U.S. Department of Education announced it would initiate a major revamp of the Public Service Loan Forgiveness (PSLF) program. The objective, the department says, is to make it easier for borrowers working in public service jobs to meet the eligibility requirements for student loan forgiveness.
This announced overhaul of the PSLF program will “immediately” impact 22,000 borrowers. Those borrowers, the Department of Education says, will see their combined $1.74 billion student loan holdings wiped out “without the need for further action on their part.” Another 27,000 borrowers could see their combined $2.8 billion student debt cleared if they certify additional periods of employment.
Back in 2007, Congress created the PSLF program as a pathway to forgiveness for public servants—everyone from federal employees to police officers. As outlined, borrowers need to simply meet the following requirements: hold a public sector job; participate in a repayment plan; and make 120 on-time student loan payments. Except obtaining forgiveness is anything but simple: About 98% of borrowers who have applied to get their loans canceled through the PSLF program have seen their application denied.
In an effort to address the program’s weaknesses—or, more accurately, its failures—the agency announced this program overhaul.
How the overhaul affects PSLF eligibility requirements
Which eligibility requirements is the agency relaxing? According to the Department of Education’s released statement, there are three big changes to the PSLF program:
- “A limited PSLF waiver that allows all payments by student borrowers to count toward PSLF, regardless of loan program or payment plan…To receive these benefits, borrowers will have to submit a PSLF form by Oct. 31, 2022, which is a single application used to certify employment and evaluate a borrower for forgiveness.”
- “Automatically providing credit toward PSLF for military service members and federal employees using federal data matches.”
- “Reviewing denied PSLF applications for errors and giving borrowers the ability to have their PSLF determinations reconsidered.”
The first update expands what types of payments count toward the 120-payment requirement (a.k.a. 10 years). It will now include payments made on loans from the Perkins Loan or Federal Family Education Loan programs. According to the agency, that change will also “waive restrictions on the type of repayment plan and the requirement that payments be made in the full amount and on time for all borrowers.” Additionally, the program will allow active duty service members to count their student loan deferments and forbearances toward their PSLF payment count.
The second PSLF update requires no work on the part of the borrower: Next year, the Department of Education will begin running federal matches to find out which military service members and federal employees are meeting (or have met) the PSLF work requirement.
Finally, the agency will begin reviewing previously denied PSLF applications for errors. If errors are found in their favor, borrowers could see their loans forgiven.
Student loan forgiveness this year
Wednesday’s announcement marks the fifth round of student loan forgiveness pushed through by the Biden-Harris administration. The first four announcements amount to $9.5 billion in canceled student loan debt held by more than 560,000 borrowers. This round takes that number to at least $11.24 billion. But depending on how many of the 27,000 additionally identified PSLF borrowers certify their past employment, that figure could rise to more than $14 billion.
However, in the grand scheme of student loan debt, this amount is still on the small side. In total, borrowers owe a combined $1.7 trillion in student loan debt.
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