In 2007, under George W. Bush, the Public Service Loan Forgiveness program was established to help public servants reduce their student loan debt after ten years of service. This allows some borrowers who work in the government or the non-profit sector to have all or most of their debt cancelled. However, many who qualified reported bureaucratic hurdles that made taking advantage of the benefit impossible. As of 2020, only around 2.6 percent of all applications who had submitted the necessary documentation to the federal government had seen their petition approved.
Now, more than a decade after the program was established, the Biden administration has taken steps to remove barriers that could make debt forgiveness a reality for more than 110,000 people.
Who is eligible?
Before the change was made, those who work in a government organization, at any level, including the military or a 501(c)(3), would be eligible if they:
Now, due to the waiver implemented by the Biden administration, changes have been made to the second and third requirements.
The Department of Education released a waiver in October 2021, which makes “any prior period of repayment […] count as a qualifying payment, regardless of loan program, repayment plan, or whether the payment was made in full or on time.” This means that even if a borrower has not been making payments during the forbearance period, the months can still form part of the “120 qualifying payments.”
Typically those with Federal Family Education Loan (FFEL) or a Federal Perkins Loan are not eligible for federal loan forgiveness, and these new rules allow these loans to be consolidated and forgiven through October of this year.
This waiver also applies to those who had made over 120 qualifying payments, and in these circumstances, one does not need to work for a qualifying employer (ie, government or non-profit) to have their debt forgiven.
If you believe that you qualify, a petition must be sent to the Department of Education before 31 October 2022.
In the future the agency plans to “pursue opportunities to automate PSLF eligibility, give borrowers a way to get errors corrected, and make it easier for members of the military to get credit toward forgiveness while they serve.” They see this as a way to correct for the failures built into the program over the last decade. In a press release put out when the waiver was introduced, the department also mentioned creating communication systems that alert borrowers when they may be eligible for any sort of debt relief of cancellation.
Options for teachers?
According to the Department of Education, teachers who have worked for at least five years in a low-income elementary or secondary school or educational service agency “may be eligible for forgiveness of up to $17,500 on your Direct Loan or FFEL Program loans.”