ED Cancels $6.8 billion of Public Servants’ Student Debt, Launches Appeal Process for Denials
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The Education Department announced Wednesday that recent changes to the Public Service Loan Forgiveness (PSLF) program had improved the accessibility of the program. The department has canceled $6.8 billion in student debt owed by federal employees and public servants through the improvements.
A key objective of the PSLF program is to encourage young people to work in the government and nonprofit sectors. Established in 2007, it forgave student loans to those who work in a “public service” capacity and continue to repay their loans over the initial 10-year repayment period. Program applicants reported difficulty submitting their submissions successfully, owing to confusion about which loans are eligible for forgiveness and which jobs qualify. Lenders’ false advertising only exacerbated the disorder, resulting in a meager rate of debt forgiveness for enrollees.
The Education Department instituted a temporary waiver last fall to allow borrowers to consolidate their loans into the correct Direct Loan program through October 31, 2022. The waiver also applies to payments that did not qualify on an initial forgiveness application due to incorrect calculations or late status. The department further pledged to cross-reference civilian and uniformed federal employee data with information to certify their employment status automatically.
“Borrowers who devote a decade of their lives to public service should be able to rely on the promise of Public Service Loan Forgiveness. 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,” Education Secretary Miguel Cardona said.
The department has approved over 113,000 applications through the waiver program, with an average forgiveness amount of $60,000 per applicant. For perspective, the department eliminated a total of $1.4 billion from the start of the program until October 31, 2021, for 18,000 borrowers. To assist individuals in applying for the limited waiver, the Education Department has launched a helpful tool.
During a roundtable recognizing Teacher Appreciation Week, Secretary Cardona also announced the department had launched a system enabling those previously denied access to the PSLF program to request a reconsideration of their application. Applicants must submit their employer’s Employer Identification Number (EIN), the dates of loan payments deemed out of compliance with FedLoan’s servicing rules, and Federal Loan Company tax forms and letters at the time of their reconsideration request.
