Public servants set to benefit from overhaul of PLSF
Rejecting applicants at an astonishing 98% rate, the Public Service Loan Forgiveness program has not been very forgiving to public servants. But that’s about to change, with the Education Department announcing a waiver through Oct. 31, 2022, that could drastically reduce student debt for more than half a million borrowers.
Immediately eligible are 22,000 borrowers with consolidated loans totally $1.74 billion. A further $2.82 billion in debt could be waived for 27,000 borrowers if they certify additional periods of employment.
“Borrowers who devote a decade of their lives to public service should be able to rely on the promise of Public Service Loan Forgiveness. The system has not delivered on that promise to date, but that is about to change for many borrowers who have served their communities and their country,” U.S. Secretary of Education Miguel Cardona said in a statement. “Teachers, nurses, first responders, servicemembers, and so many public service workers have had our back especially amid the challenges of the pandemic. Today, the Biden Administration is showing that we have their backs, too.”
Free from obligation, that money can circulate through the economy, resulting in a net benefit for many more people. It’s in many ways its own form of economic stimulus, and it brings student loan cancellation total this year to more than $11.5 billion.
Among the changes to the PSLF are: allowing months service members spend on active duty to count toward payment even if the loans were on deferment or forbearance at the time, giving service members automatic credit for the program without making them fill out extra paperwork, a review of applications that were denied because of filing errors, and further simplifying the application process. Borrowers will also not be automatically denied because of a missed payment or one in an incorrect amount.
“This is a commonsense fix that will support public servants and ensure that they are able to give back without the worry of student debt,” New Hampshire Sen. Maggie Hassan said in a statement. “This is a positive step forward, and I’ll keep working to make sure that we address the student loan crisis and support our public service workforce.”