According to the most recent Education Department data, approximately 145,000 federal student loan borrowers have received $8.1 billion in relief as a result of changes to a federal loan forgiveness program.
According to the Wall Street Journal, $8.1 billion in debt relief has been approved since October, when the Education Department made changes to the Public Service Loan Forgiveness program.
The PSLF, or Public Service Loan Forgiveness, program was established in 2007 with the goal of assisting employees of nonprofit and government organizations in having their student loans forgiven after ten years of payments (120 total payments). The overall approval rate among applicants has been low – according to a September 2021 report from The Washington Post, only one in every five of the 1.3 million borrowers pursuing debt discharge through PSLF were on track to see relief by 2026.
In 2021, the U.S. Department of Education announced a change that temporarily waives specific PSLF requirements to grant borrowers credit toward loan cancellation regardless of federal loan type or payment plan enrollment. This waiver will currently expire on October 31, 2022.
According to a recent report from the Student Borrower Protection Center, over nine million public service workers are likely eligible for debt cancellation through the PSLF program but have yet to file the necessary paperwork. According to SBPC, the states with the most public servants with student loan debt are California, Texas, Florida, and New York.
As was said above, PSLF is meant to help people who work for the government get out of debt after they have made a certain number of payments.
Borrowers who are an eligible must:
- Work for a U.S. federal, state, local, tribal, or not-for-profit government agency (federal service includes U.S. military service)
- Full-time work for that agency or group
- Give out direct loans (or consolidate other federal student loans into a Direct Loan)
- Make 120 payments that count
- Under the current PSLF waiver, borrowers who qualify can get credit for payments made on other types of loans, under any payment plan, before or after the due date, and before or after consolidation. People who got Teacher Loan Forgiveness can use the time they spent working as a teacher to qualify for PSLF if they can prove they were working for PSLF during that time.
How to determine if you qualify
The first thing you need to do to see if you are eligible is to go to the FSA’s website and sign in to your account. You will be able to look up your employer in the FSA’s database and add information about your job. When you find your employer, you can check to see if it is eligible for PSLF.
Next, the SBPC walkthrough guide says you should figure out what kind of federal student loans you have. PSLF can be used with Direct Loans, but other loans need to be merged into a Direct Consolidation Loan. Until the end of October 2022, payments you’ve already made on a loan that isn’t a Direct Loan that qualifies will count toward the 120 payments PSLF needs to forgive your loan.
Once you’ve done all of those things, you’ll need to confirm that you’re working. After that, you should be able to send your PSLF form.
The FSA has made a tool to help borrowers figure out how to fill out the form.
Who is eligible for the forgiven student loans that have already been approved?
Although widespread forgiveness of student loans has not yet materialized, some American borrowers have already experienced some debt relief. Since President Biden took office, approximately 1.3 million borrowers have received $25 billion in student debt forgiveness.
Another 690,000 borrowers had a total of $7.9 billion in student loans discharged through discharges due to borrower defense and school closures, on top of the thousands of borrowers who received debt cancellation under the updated PSLF program. Through total and permanent disability discharge, more than 400,000 borrowers have benefited from debt forgiveness totaling more than $8.5 billion.
As part of a proposed class-action settlement, the Biden administration last week agreed to forgive $6 billion in federal student debt for about 200,000 borrowers. The borrowers contend that their college cheated them, which is why the Department of Education took so long to process their applications for relief.
In July or August, Biden is anticipated to make his intentions regarding more widespread student debt forgiveness public.