More than 175,000 people are set to receive about $10 billion in student loan debt forgiveness through a government program designed to encourage people to work in public service, the Department of Education said.
The figures, released Tuesday, came as President Joe Biden is expected to announce as early as Wednesday whether the federal government will cancel the $10,000 debt for borrowers making less than $125,000 a year. Although the $10 billion figure is a fraction of what is expected to be written off, the changes to the program for public service workers still mark some of the largest chunks of debt to be written off by the federal government.
It’s also part of the $32 billion in student loans the Biden administration has already forgiven through existing debt relief programs. Most recently, the federal government wrote off nearly $4 billion in federal loans for approximately 208,000 borrowers who attended ITT Technical Institute from January 2005 to September 2016.
“Today’s announcement that we have surpassed $10 billion in forgiveness for more than 175,000 public employees shows that the Biden-Harris administration’s efforts to cut red tape are turning the public service loan forgiveness program from a broken promise to a kept promise” , said the Minister of Education. Miguel Cardona said.
What is the Public Service Loan Forgiveness Program?
The Public Service Loan Forgiveness program has long had a reputation for being difficult for borrowers to use. Generally, those who work for the government or non-profit organizations qualify. This can include teachers and firefighters, but also public defenders and doctors.
The program requires borrowers to work full-time in an eligible public service position and repay their federal student loans for 10 years. The federal government would then forgive whatever balance remains after a decade.
It didn’t work that simple in practice.
The federal government for years rejected nearly all applicants because of the program’s strict criteria. It required, for example, borrowers to carry direct loans, those directly owned by the government, although many borrowers didn’t know they had the wrong type of loan until they had made years’ worth of payments. Borrowers were also rejected because they were on the wrong type of repayment plan or had made late payments.
How did the Biden administration change the public service loan forgiveness program?
In October, the Biden administration relaxed many of the program’s rules, and borrowers can now get credit for most past payments as long as they can show they were working in an eligible position at the time. When the ministry first announced the waiver, it said it would write off the debt of 22,000 borrowers and expected another 27,000 could benefit from the full write-off.
The definition of public service is based on a person’s employer, not their occupation, which can make it difficult to track the number of people eligible for the program.
The window to apply while some rules are being waived closes on Oct. 31, but on Tuesday more than 100 lawmakers and dozens of trade groups signed a letter urging the administration to extend it until July 1, 2023. (The Education Department urged borrowers who think they might are eligible to apply before the waiver expires.)
The effort was spearheaded by Senator Robert Menendez, New Jersey. Patty Murray, Washington and the chairwoman of the Senate Committee on Education. Tim Kaine, Virginia; Kirsten Gillibrand, New York, along with Reps. John Sarbanes, Maryland; Joe Courtney, Connecticut; Jahana Hayes, Connecticut; and Kathy Manning, North Carolina.
They cited data from the Student Borrower Protection Center, a borrower advocacy group, which estimated that only 15 percent of the 9 million people who could be eligible for the program had begun the application process.
“As the October 31, 2022 deadline to qualify for PSLF under the waiver program is fast approaching, we are asking the Department to extend this deadline to ensure that all government employees with federal student loans can take advantage of this historic resignation. ” they wrote.
The letter’s signatories also asked the Biden administration to increase its outreach to borrowers who may qualify for the program.
The Department for Education said it would host four “action days” in the coming weeks to “encourage public servants across the country to take advantage of the temporary changes” to the scheme. And Biden will send a letter to federal employees on Wednesday informing them of the changes to the program and how they can apply.
This article originally appeared on USA TODAY: Feds forgive billions in student loans for public service workers