More than 615,000 borrowers have $42 billion in total student loan forgiveness forgiven through temporary changes made to the Public Service Loan Forgiveness (PSLF) process as of October 2021, the The US Department of Education announced on Monday. That includes nearly 610,000 borrowers who saw their debt discharged.
The PSLF program was created to encourage people to work in fields such as education, health care, law enforcement, and nonprofit work. Those who have worked full-time in a qualified public service job for at least 10 years and have made 120 on-time payments throughout that time can apply for the rest of their debt is forgivable, tax-free.
But the program has long failed to meet borrower expectations: Although it has existed for several years, only 7,000 people were approved for forgiveness before Biden took office, according to the Department of Education. That is due not only to the complex nature of the application process, but also because of mishap on the part of the student loan servicer.
Under Biden, the Department of Education has made several changes since then to make it easier to achieve remission, including offering a one-time waiver to retroactively expand the types of loans and payments eligible for assistance.
The waiver allows qualified borrowers to receive credit for all payments they make on their loans. This includes those enrolled in the wrong payment method, or those who make late or incomplete payments. The borrowers are eligible for remission if they have made 120 on-time payments.
Borrowers receiving forgiveness will be notified by MOHELA, the student loan servicer for PSLF, and by logging into their accounts and viewing the say “smiley face” and a $0 balance.
“I literally cried tears of joy,” Meredith Shuman, a 35-year-old with more than $43,000 forgiven earlier this year after submitting a waiver, SPOKE luck. “It’s nice to see all the zeros.”
The Department of Education also recently announced that starting in July 2023, borrowers on the PSLF track will be able to complete the entire application process online, including allowing applicants and their employers to submit signatures on electronically for the first time. Previously, borrowers had to print and sign their form and have their employers sign the form, before mailing or faxing it.
Other changes to the PSLF program
Apart from the waiver, there are others long-term regulatory change go to PSLF to simplify the application process.
Beginning in July 2023, borrowers on the PSLF track will receive credit for late payments and those made in installments. In addition, certain periods of loan deferment and forbearance count toward the 120 payments required to receive forgiveness, including deferments for cancer treatment, economic hardship, and military service.
In addition, the Department of Education conducts a one time account adjustment for borrowers with Direct Loans. Additional payments will count toward debt forgiveness for those on PSLF or income-driven repayment plans. This will put many borrowers closer to reaching PSLF, or in some cases, result in their balance being forgiven and still eligible for a refund, depending on how many payments they made. Borrowers do not need to do anything for this relief.
The state of widespread student loan forgiveness
PSLF is a separate program from Biden’s a one-time student loan forgiveness initiative. That program, announced in August 2022, will forgive up to $20,000 in student loans for most federal borrowers, and which is currently being reviewed by the US Supreme Court.
Currently, all borrowers can do is await the decision of the Supreme Court whether or not the amnesty program can continue as planned. The decision should be announced by the end of June. Meanwhile, Federal student loan payments remain on hold.
The outcome of that case will not affect the PSLF or the changes to that program implemented by the Biden administration.