The Education Department announced that it has approved $42 billion in student loan forgiveness for at least 615,000 borrowers under new flexibilities for public servants.
The approvals show substantial progress in the Biden administration’s efforts to broadly cancel the federal student loan debt for borrowers who have devoted their careers to nonprofit and government work. The updated statistics show that over 160,000 additional borrowers have been approved for student loan forgiveness under the initiative since the department last updated its statistics in February.
Here’s the latest.
Student Loan Forgiveness Through Public Service Initiatives
The Biden administration has implemented the unprecedented student loan forgiveness relief through temporary flexibilities under the Public Service Loan Forgiveness program, or PSLF. The PSLF program can cancel the federal student loan debt for borrowers who work as employees for nonprofit or government organizations. After making 120 “qualifying payments” (which is equivalent to 10 years if the payments are made consecutively), borrowers can achieve a complete discharge of their federal student loans.
The PSLF program had problems for years, however. The program had complicated rules and was plagued by mismanagement and poor oversight. For a time, approval rates hovered in the one-to-two percent range.
President Biden unveiled the Limited PSLF Waiver in 2021 to address these longstanding issues. Under this time-limited opportunity, the Education Department temporarily relaxed the original PSLF rules and expanded what can be credited toward the 120 qualifying payments needed to receive federal student loan forgiveness. The Limited PSLF Waiver ended last fall, but the Education Department is still processing a backlog of applications.
“Since Day One, the Biden-Harris Administration has worked relentlessly to fix a broken student loan system, including by making sure we fulfill the promise of Public Service Loan Forgiveness for those who have spent a decade or more serving our communities and our country,” said U.S. Secretary of Education Miguel Cardona in a statement on Monday. “To date, the Biden-Harris team has kept that promise for more than 615,000 teachers, nurses, social workers, servicemembers, and other public servants by approving a combined $42 billion in student loan debt forgiveness. The difference that Public Service Loan Forgiveness is making in the lives of hundreds of thousands of Americans reminds us why we must continue doing everything we can to fight for borrowers and why families cannot afford to have progress derailed by partisan politicians.”
PSLF Waiver Benefits Extended, Allowing For More Student Loan Forgiveness
While the Limited PSLF Waiver technically ended in October, the Biden administraiton effectively extended many of its benefits through the IDR Account Adjustment. This related initiative temporarily relaxes the rules of Income-Driven Repayment programs, which allow borrowers to repay their student loans based on their income.
Income-Driven Repayment programs, or IDR, can result in student loan forgiveness after 20 or 25 years, depending on the plan, regardless of the borrower’s employment. But the periods credited toward IDR student loan forgiveness under the IDR Account Adjustment can also count toward PSLF for borrowers who were working in qualifying public service employment. This includes many past periods of repayment, as well as certain periods of deferment and forbearance.
“All periods credited toward IDR will also be credited toward PSLF for eligible loans and periods where the borrower certifies public service employment,” says the Education Department in new guidance published last month.
The Biden administration is just starting to roll out the IDR Account Adjustment after several delays. Borrowers will continue to receive student loan forgiveness under both IDR and PSLF through this summer, but the adjustment is not expected to be fully implemented until sometime in 2024.
What Borrowers Should Do To Apply For Student Loan Forgiveness Through IDR Account Adjustment
Borrowers who missed the boat on the Limited PSLF Waiver can still potentially receive tremendous student loan forgiveness benefits through the IDR Account Adjustment. Borrowers who already have Direct federal student loans should “use the PSLF Help Tool to certify periods of employment and track your progress toward forgiveness,” says the Education Department guidance.
Meanwhile, borrowers who have non-Direct loans such as FFEL loans or Perkins loans should consider Direct loan consolidation before the end of 2023. “Borrowers who have commercially or federally held FFEL loans and who consolidate those loans into Direct Consolidation Loans before the end of the year will also get PSLF credit under the account adjustment,” says the department.
Further Student Loan Forgiveness Reading
To Qualify For Student Loan Forgiveness Under Adjustment, Do These Things, Says Education Department
The Student Loan Pause May End In Phases, With Some Features Extended — Key Updates On Timing
Education Department Sends Student Loan Forgiveness Emails To Next Group Of Borrowers Covered By Settlement
What The Supreme Court’s Latest Move Means For Student Loan Forgiveness
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