A new proposal would speed up student loan forgiveness for public service borrowers – but its fate is uncertain
House Democrats unveiled a new bill this week that would reform a key student loan forgiveness program. If passed, the bill would dramatically accelerate student loan forgiveness for borrowers who have dedicated their careers to public service.
Here are the details.
Student Loan Forgiveness for Public Service Borrowers Has Already Undergone Big Recent Changes
The Public Service Loan Forgiveness Program (PSLF) can erase federal student loan debt for borrowers who work for nonprofits or government organizations. Under the program’s original rules adopted in 2007, borrowers must work as full-time employees for at least 10 years for qualifying employers to become eligible for student loan forgiveness.
But for years, the PSLF program has been plagued by complicated and poorly communicated rules, as well as administrative and implementation issues, leading to exorbitant refusal rates. To address these issues, in October the Biden administration announced the Limited PSLF Waiver, a temporary overhaul that relaxes some of the PSLF’s problematic eligibility rules to allow for prior loan periods — such as payments made on loans. non-eligible federal students or under non-eligible repayment plans – to “count” toward a borrower’s student loan forgiveness term under the PSLF.
Education Secretary Miguel Cardona touted $8.1 billion in new student pardons approved under the limited PSLF waiver, calling the overhaul “life changing” for borrowers.
But the waiver program does not change the terms of employment of the PSLF – borrowers must still commit to 10 or more years of public service work for eligible employers, even under the waiver. Additionally, the waiver is temporary and is set to end Oct. 31, 2022. Student loan advocates have urged Biden and Secretary Cardona to extend the initiative — but so far senior officials have given no indication that an extension is seriously considered. .
New proposal would speed up PSLF student loan forgiveness
This week, several House Democrats unveiled the “Simplifying and Strengthening the PSLF Act of 2022,” which would build on some of the reforms from the PSLF Limited Waiver and make even more sweeping changes to the program. Among them, the bill would shorten the employment commitment for student loan forgiveness under the PSLF from 10 years to five years.
“The Biden administration has put the Department of Education back on the side of American students and workers – they made that clear when revamping the PSLF last fall, and our new bill would make those improvements permanent” said Rep. Joe Courtney (D-CT), one of the bill’s lead sponsors, in a statement. “The PSLF was created to reward Americans who enter careers that our communities depend on, such as teachers, nurses, firefighters and police officers…The PSLF’s October revamp was a big step in the right direction. leadership, and our new bill would codify those improvements, along with an additional list of upgrades to make it easier for U.S. public service workers to qualify, navigate, and benefit from this patriotic program.
In addition to shortening the employment commitment for PSLF, the bill would also codify key elements of the limited PSLF waiver into law by allowing any repayment period to count for PSLF, regardless of type. federal loan, repayment plan, or whether payments have been made in full. or on time.
“The Biden administration’s temporary waiver of public service loan forgiveness has been a game-changer for borrowers, many of whom are impoverished by student loan debt,” Randi Weingarten, president of the American Federation of Teachers, said in a statement. a statement. “The waiver means many of our members across the country are breathing the sigh of relief that comes with being freed from student debt after their decade of public service was recognized, as Congress intended. But this relief is temporary… The PSLF simplification and reinforcement law perpetuates the exemption bonuses and modifies the program to allow relief to borrowers after five years of public service. The sponsors of this bill have contributed to much-needed debt forgiveness, the only just and moral response to the nation’s student debt crisis.
Fate of new PSLF bill uncertain as Biden administration moves forward with regulatory overhaul
While the new PSLF bill could potentially pass the House, it has a better chance of passing the Senate, where Democrats only have a narrow majority. Many of President Biden’s top priorities passed the House successfully, only to die in the Senate.
While the fate of the new proposal is uncertain, the Ministry of Education is moving forward with a regulatory overhaul of the PSLF. Last week, the ministry unveiled proposed new regulations for the PSLF program. The new regulations would codify some elements of the waiver initiative, including allowing more types of payments to count toward student loan forgiveness. But the new rules would not go as far as the derogation or the law of simplification and reinforcement of the PSLF. The Department cited “statutory restrictions” for its failure to codify all elements of the limited PSLF waiver in its regulatory overhaul, noting that legislation passed by Congress may be required to accomplish this.
But given the lack of congressional action on a range of issues and the rapid expiration in October of the limited PSLF waiver as well as the November election, the Biden administration could face mounting pressure to extend the waiver to the beyond October 31.
Further Reading on Student Loans
3 Key Student Loan Forgiveness Opportunities Could End Soon – Here’s How to Apply
If You’ve Been To These Schools, You May Qualify For Student Loan Forgiveness: Here’s What To Do
Biden Reportedly Close to Making a Decision on Widespread Student Loan Forgiveness – Here’s Where It Stands
Biden administration may extend life-changing student loan forgiveness initiative, but questions remain