Circle back: How’s that Public Service Loan Forgiveness overhaul going?

The Public Service Loan Forgiveness (PSLF) program is becoming more forgiving.

A federal overhaul of the program was announced in October 2021 (in part, through a temporary “Limited PSLF Waiver” program), and the Department of Education estimates that some 70,000 borrowers have qualified for roughly $5 billion in student-loan debt relief so far through the PSLF limited-waiver program, according to Forbes. (The waiver is in effect through October 2022.)

Wait, what’s PSLF? A PSL with foam? In 2007, the College Cost Reduction and Access Act was passed and included a program to forgive some federal student-loan debt to incentivize careers in public service, specifically full-time work for a public or government entity, or a 501(c)(3) nonprofit organization: the PSLF program. (PSLF is often touted on qualifying employers’ websites.)

However, for many, the program, which is generally open to student-loan recipients after they’ve worked in qualifying nonprofit or public-sector jobs for a decade, didn’t work as intended:

• The Department of Education denied 98% of PSLF applications between November 2020 and October 2021.
• Some borrowers discovered they weren’t eligible for forgiveness after making years of payments working in what they thought were qualifying positions.

Critics of the original program said the high rejection rate for loan forgiveness meant PSLF was not the public-sector recruitment tool it was meant to be. Erin Powers, the director of marketing and communications at the National Association of Student Financial Aid Administrators (NASFAA), told HR Brew in October that low trust in the program could actually be a deterrent to pursuing public service.

“The employees’ mistrust of the program and concern over their debt can lead would-be public servants into other types of work,” Powers explained.

Promises, promises. Last fall, the Department of Education announced sweeping changes to “restore the promise of PSLF” in order to “provide debt relief to support the teachers, nurses, firefighters, and others serving their communities through hard work that is essential to our country’s success.” The application process was simplified for borrowers, and the department offered the limited-time waiver allowing student borrowers to “count payments from all federal loan programs or repayment plans toward forgiveness.”

Congressman John Sarbanes, who helped author the legislation that created PSLF, told HR Brew in a statement that he’s “pleased that the Biden administration has taken action to expand PSLF eligibility to more than 70,000 borrowers and is looking at additional changes to lift existing impediments to loan forgiveness under the program.”

On social media, borrowers have recently gushed after receiving student-loan debt forgiveness through the new program. Earlier this month, Twitter user @danwho wrote, “I just got a letter today saying that the new Dept of Ed program re-reviewed my application and 120+ payments, and effective today, has FORGIVEN THE ENTIRE BALANCE.”

After he said he was informed that $377k of his medical student loans had been forgiven, Twitter user James Iannuzzi exclaimed, “Yes there is hope!”

Others, however, are still waiting for relief. Borrower Jessica Rodgers recently tweeted she’d been excited to receive an email from the DOE’s Federal Student Aid, thinking her payment counts may have been were updated, until she realized it was “just another update saying an update is coming.”

Zoom out: Overall, the total amount of student loan debt in the US is $1.75 trillion and is growing “six times faster than the nation’s economy,” according to the Education Data Initiative, which estimates that the average federal student loan debt balance is over $37k.—SV

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