Student Loan Forgiveness Temporarily Expanded
The Biden Administration is temporarily expanding a student loan forgiveness program aimed at public servants.
Service members, teachers and other public servants who have been shut out of a controversial student loan forgiveness program will get another chance at debt cancellation, the Education Department said Wednesday.
The federal agency will temporarily allow all payments borrowers made on federal student loans to count toward Public Service Loan Forgiveness, regardless of the loan program or payment plan. It estimates the move will bring more than 550,000 people closer to debt cancellation, including 22,000 who will be immediately eligible.
“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 Wednesday.
Created by Congress in 2007, the loan forgiveness program has been derided by participants, lawmakers and consumer groups for being exceedingly complex and poorly managed.
To qualify, borrowers must make 120 on-time monthly payments for 10 years to have the remaining balance canceled. They must work for the government or certain nonprofit organizations. They must have loans made directly by the federal government. And they must be enrolled in specific repayment plans, primarily those that cap monthly loan payments to a percentage of their income.
People have complained of receiving bad advice from loan servicing companies hired by the department, leading them to believe they were making qualifying payments when they were not.
Poor guidance can add years to the process and be devastating for those who plan their lives and careers around the promise of tax-free debt cancellation, consumer advocates say. They say that many awaiting forgiveness have been paying their debt for more than a decade but are being held back by technicalities.