US Department of Education overhauls Public Service Loan Forgiveness Program
The US Department of Education announced Wednesday that federal student loan forgiveness program would facilitate several major changes that may ease the financial burdens of borrowers employed in governmental and nonprofit sectors, CNN reports.
By means of the Public Service Loan Forgiveness program, the government forgives remaining federal student loan debt for qualifying public-sector workers once they've made monthly payments for ten years.
At first glance, this may appear to be a solid form of assistance, but some say the program was faulty due to its lack of accessibility and shoddy service from the billing companies and other support departments that borrowers are put in touch with.
For example, a number of borrowers said they didn't even realize they weren't eligible for forgiveness only after they'd paid what they believed were a decade's worth of qualifying monetary installments.
The government hopes to address these issues, according to an announcement Wednesday from the Education Department. The Department said it will "restore the promise" of the debt relief program through a series of actions that will be implemented "over the coming months."
The changes would include the offer of a time-limited waiver authorizing "all prior payments" from student borrowers to count towards the program, including loan types and payment plans that didn't previously qualify for forgiveness.
This waiver will continue through October 31, 2022, the government said.
"This Limited PSLF Waiver will apply to borrowers with Direct Loans, those who have already consolidated into the Direct Loan Program, and those with other types of federal student loans who submit a consolidation application into the Direct Loan Program while the waiver is in effect," according to the agency's memo.
The waiver is one aspect of an attempt to upgrade the public service loan program that has been inundated with problems since it was signed into law by George W. Bush in 2007.
Among the many issues that borrowers are left with are confusion about eligibility requirements and the correct types of federal student loans and repayment plans.
In addition to these failures, the program has experienced a host of miscommunications between the Education Department and its loan servicers, and similar miscommunications between the servicers and borrowers.
"Borrowers who devote a decade of their lives to public service should be able to rely on the promise of Public Service Loan Forgiveness," said Education Secretary Miguel Cardona in a statement Wednesday. "The system has not delivered on that promise to date, but that is about to change for many borrowers who have served their communities and their country."
In addressing errors in the application review process as "particularly worrisome," the department added that it anticipates overseeing both internal reviews of denied applications and external reviews of processing involved in the program.
"These actions will help identify and address servicing errors or other issues that have prevented borrowers from getting the PSLF credit they deserve," the agency said in a press release.
Wednesday's announcement also includes an initiative to assist military service members and federal employees access the public service loan program's resources.
"Next year, the Department will begin automatically giving federal employees credit for PSLF by matching Department of Education data with information held by other federal agencies about service members and the federal workforce," the agency stated.
According to the new rules, military service members will notice that time spent on active duty is credited towards the program, even if loans were on deferment or forbearance.
"Federal Student Aid will develop and implement a process to address periods of student loan deferments and forbearance for active-duty service members and will update affected borrowers to let them know what they need to do to take advantage of this change," the memo said.
The Education Department also vowed to create an "extensive outreach campaign" to borrowers, simplify the application process, and make longer-term improvements to the program in the months to come.