Another $6.2 billion in school loans repaid via civil service loan forgiveness
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About 100,000 student borrowers have been identified by the U.S. Department of Education as eligible for debt forgiveness under the Civil Service Loan Forgiveness Program, the Biden administration announced Wednesday.
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The cancellations represent about $6.2 billion in federal student debt relief, CNN reported. Eligible borrowers are notified on an ongoing basis, so not all have been contacted yet. Education Ministry officials could not provide a date when all eligible borrowers will be notified.
The Public Service Loan Forgiveness Program, or PSLF, aims to erase any remaining federal student loan debt after eligible public service workers have made 10 years of monthly “qualifying payments.” The program, created in 2007, is available to borrowers who work full-time for nonprofits or public organizations, but it has been criticized for not reaching enough eligible borrowers.
A very small percentage of people who applied to the program actually received loan forgiveness before 2021. This is mainly because the PSLF’s original rules governing “eligible payments” were complex and poorly communicated to borrowers, Forbes reported. . This resulted in very low approval rates and widespread frustration.
Wednesday’s announcement reflects a broader effort by the Biden administration to expand relief under the PSLF program. In October, the administration unveiled the temporary “Limited PSLF Waiver” program. Under this program, the Department of Education will temporarily count prior repayment periods that would otherwise have been disallowed under the original PSLF rules, including payments made on non-direct federal loans and payments made in the non-eligible reimbursement plans.
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With the waiver, it no longer matters what type of federal student loan a borrower is or what type of repayment plan they are enrolled in. All payments will be PSLF eligible if the borrower worked full-time for an eligible employer.
“Our nation’s public service workers must be able to rely on the promise of public service loan forgiveness,” US Education Secretary Miguel Cardona said in a statement. “The Biden-Harris administration is delivering on that promise by helping more and more eligible borrowers get their loan balances forgiven. Today’s PSLF announcement means that more of our teachers, nurses, first responders, service members and many other dedicated public service workers will benefit from significant relief.
Meanwhile, federal student loan repayments are set to resume on May 1 after being paused since March 2020 as part of the government’s efforts to help Americans deal with the financial fallout from the COVID-19 pandemic. But as GOBankingRates reported, White House Chief of Staff Ron Klain said last week that the Biden administration is considering extending the hiatus beyond May 1, although nothing official has been announced. has yet been decided.
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