550K borrowers will benefit from the program redesign
WASHINGTON – The U.S. Department of Education on Wednesday unveiled major changes to a distressed student loan cancellation program designed for borrowers working in the public service – but has been criticized for its complex requirements.
The new temporary changes will free about half a million borrowers from their debts.
The Public Service Loan Forgiveness (PSLF) program was launched in 2007 to reward students entering the public service, including many teachers, nurses, social workers and the military. As long as they made 10 years of payments on their federal student loans, the program promised to erase the rest.
But since its inception, the program has only helped 5,500 borrowers cancel their loans. After making a decade of payments, many borrowers found they didn’t have the right kind of federal loan or repayment plan to qualify for the program.
According to the Associated Press, more than 90% of the candidates were rejected, ending up with a debt that they believed would ultimately be forgiven.
Under the new changes, these borrowers will now be able to get their loans written off. The Education Department has announced a ‘overhaul’ of the curriculum, saying it would remove some of the more stringent requirements and could lead to debt relief for thousands of teachers, social workers, the military and others. officials.
RELATED: Several colleges and universities write off student tuition debt for COVID-19 relief
Borrowers who have worked 10 years in qualifying employment will be eligible for loan relief regardless of what type of federal loan or repayment plan they have until October 31, 2022. Previous loan payments that were previously ineligible will now count, bringing some borrowers closer to the finish line, the ministry said.
The change will immediately make 22,000 borrowers eligible for loan cancellation, and another 27,000 could become eligible if they get past payments certified, the department said.
In total, more than 550,000 borrowers will move closer to remission “with the average borrower receiving 23 additional payments,” the agency said.
“Borrowers who devote a decade of their lives to public service should be able to count on the public service loan forgiveness promise. The system has failed to deliver on that promise to date,” the US Secretary of Education said. , Miguel Cardona, in a press release.
“Teachers, nurses, first responders, the military and so many public service workers are supporting us, especially amid the challenges of the pandemic. Today, the Biden administration shows that we are supporting them too,” added Cardona.
FILE – US Secretary of Education Miguel Cardona speaks during a hearing of the Senate Committee on Health, Education, Labor, and Pensions in Washington, DC, September 30, 2021. (Photographer: Greg Nash / The Hill / Bloomberg via Getty Images)
It is particularly beneficial for borrowers on Federal Family Education Loans, a former loan program that provided federally guaranteed loans through banks. Loans from this program, which ended in 2010, were previously ineligible, but can now be canceled thanks to the updated rules.
The ministry will also allow servicemen to count active duty time around 10 years, even if they take a break in their payments during that time.
The ministry noted that members of the military “frequently find out that those same postponements or abstentions granted while serving our country did not count” for the student loan cancellation program.
“This change ensures that members of the military will not need to focus on their student loans while serving our country,” the department said.
This story was reported from Cincinnati. The Associated Press contributed.