Feds’ changes to Public Service Loan Forgiveness Program may provide quicker debt cancellation for school employees
Congress | Federal Educator Compensation | Benefits
Date Posted: 10/06/2021 | Author: Andrea Chevalier
On Wednesday, Oct. 6, 2021, U.S. Secretary of Education Dr. Miguel Cardona announced significant changes to the Public Service Loan Forgiveness (PSLF) Program that will increase access to federal student loan forgiveness for eligible borrowers.
The PSLF provides public servants, including teachers and other school employees, access to loan forgiveness after 10 years of public service if they meet certain requirements, such as full-time employment with a qualified employer and having made 120 qualifying payments on the loan. ATPE has long supported loan forgiveness programs that will reduce the financial burdens on current educators and those who are considering going into the education profession.
The PSLF program came under scrutiny during the Trump administration after the U.S. Government Accountability Office (GAO) reported that 99% of people who applied to the program were rejected by U.S. Department of Education (ED). Many of the issues borrowers have encountered in accessing PSLF benefits have been the result of an overly complicated application process and lack of clear information. In his Oct. 6 announcement, Secretary Cardona noted that the program “has not delivered on [its] promise to date.”
Prior to the changes announced this week, all the following criteria were required to access the PSLF, at which point an individual’s remaining student loan balance would be forgiven:
- Be employed by a U.S. federal, state, local, or tribal government or not-for-profit organization (including U.S. military service), excluding partisan organizations and labor unions
- Work full-time for the qualified employer
- Have Direct Loans (or consolidate other federal student loans into a Direct Loan)
- Repay your loans under an income-driven repayment plan
- Make 120 full and on-time monthly payments while employed by qualifying employer
The changes to the PSLF increase federal loan borrowers’ access to forgiveness by allowing previously ineligible payments to count towards a borrowers’ progress toward the required 120 monthly payments. These changes include:
- Payments made while not on an income-driven repayment plan
- Payments made on previously ineligible loans from the Federal Family Education Loan (FFEL) Program, Perkins Loan Program, or other non-Direct Loans (if the borrower consolidates the loans by Oct. 31, 2022)
- Partial payments and late payments
Note that all these newly eligible payments must have occurred while the borrower was working for a qualifying employer.
ED also announced it will review denied PSLF applications for errors and give those borrowers the ability to have their PSLF determinations reconsidered. Additionally, the requirement that an individual be employed at a qualifying employer when they receive forgiveness is waived until Oct. 31, 2022.
What to do by Oct. 31, 2022, if you qualify:
- Apply for the PSLF.
- Consolidate your loans, if necessary.
Read ED’s fact sheet about the changes here, and find more information on PSLF qualifications here.
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