Billions in Student Loan Debt Forgiven Under Revamped Program: Do You Qualify?

More than 110,000 people have had about $6.8 billion in student loans forgiven under a revamped federal program, the US Department of Education said earlier this week.

The Biden administration announced changes to the Public Service Loan Forgiveness Program in October 2021. The program temporarily waived certain rules to make it easier for some payments borrowers have already made to qualify for loan forgiveness, WXIN reports.

The department said more than 113,000 borrowers have seen their balances downloaded so far, with an average balance of around $60,000 per person.

Originally started in 2007, the program was intended to help employees of nonprofit and government agencies get their student loans forgiven after ten years of payments (120 total payments). But the program struggled to deliver on its promise, and many who applied ran into roadblocks or learned they were ineligible.

The overall approval rate among applicants has been low: Only 1 in 5 of the 1.3 million borrowers seeking debt forgiveness through PSLF were on track to see relief by 2026, according to a report from september 2021 washington post.

What changes were made to PSLF?

The federal government made key changes to the program last year, making some payments eligible that would not have qualified under previous rules.

According to the Department of Education, these are the changes:

• Receive credit for payment periods on Direct, FFEL, or Perkins Loans
• Payment periods under any plan count
• Loan repayment periods before consolidation count, even if the repayment plan is wrong.
• Repayment periods in which payments were late or less than the amount due also count
• Repayment periods on pre-consolidation loans count, even if they are paid late or for less than the amount owed
• You can get discharged even if you are not employed or employed by a qualified employer at the time of application and discharge
• If you obtained teacher loan forgiveness, the period of service leading up to your eligibility may count toward PSLF if you certify PSLF employment for that period.

The rule changes were part of a new federal policy put in place for the COVID-19 pandemic. They are temporary and will expire after October 31, 2022.

Who qualifies for PSLF?

To be eligible, the Department for Education says you must:

• Be employed by a US federal, state, local, or tribal government or nonprofit organization (Federal service includes US military service)
• Work full time for that agency or organization
• Have direct loans (or consolidate other federal student loans into a direct loan)
• Make 120 qualifying payments

May learn more about the program here.

Who else qualifies for student loan forgiveness?

While running for office, President Joe Biden voiced his support for $10,000 per borrower federal student loan forgiveness. A little over a year into his presidency, Biden has yet to make any sweeping cancellation of student debt.

However, the administration has written off more than $17 billion in debt for some 725,000 borrowers for multiple reasons, including those affected by the aforementioned changes to the PSLF program.

Others that qualify include 40,000 who received immediate debt cancellation thanks to actions to “fix longstanding flaws in student loan programs” last month, borrowers with total and permanent disabilityand borrowers defrauded by their school.

President Biden appears to be moving forward with pay off at least some of the student debt in the hands of the Americans, but it is not yet clear exactly how much and when.