WASHINGTON — The U.S. Department of Education on Wednesday announced major changes to a federal student loan forgiveness program for public service workers, a move that could alleviate debt to more than 550,000 borrowers.
Through the Public Service Loan Forgiveness program, the government forgives remaining federal student loan debt for qualifying workers after they have made monthly payments for 10 years, CNN reported.
“Borrowers who devote a decade of their lives to public service should be able to rely on the promise of Public Service Loan Forgiveness,” U.S. Secretary of Education Miguel Cardona said in a news release. “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.”
The US Department of Education announced major changes to a federal student loan forgiveness program that the agency says could bring relief to thousands of borrowers working in government and nonprofit sectors. https://t.co/97L0TRsXQb
— CNN Breaking News (@cnnbrk) October 6, 2021
“I’m hopeful,” said Jen Gubitz, a rabbi in Boston who has worked in qualifying nonprofit jobs for nearly a decade but ran into issues attempting to have her loans erased, told The New York Times. “I’m relieved not just personally, but for society. Student loan debt is such an issue for so many people.”
Congress created the program in 2007 to encourage people to work in government or for some nonprofits, The Wall Street Journal reported.
To qualify for the program, borrowers had to be working in a public-sector job, according to NPR. They also had to have 120 on-time student loan payments, were participating in a qualified repayment plan and had a specific type of loan, known as Federal Direct Loans, the website reported.
More than 1 million borrowers have made at least one qualifying payment, but only a small percentage has received forgiveness, CNN reported. Approximately 5,500 people have had their debt eliminated, according to the latest government data.
In the past, monthly loan payments were disqualified for either being received late or for not being the proper amount required, NPR reported. The Department of Education said that under the new guidelines, those payments will be counted toward relief.
The changes will temporarily allow all payments -- regardless of loan type -- to count toward the PSLF program if borrowers consolidate their student debt by Oct. 31, 2022, The Wall Street Journal reported.
People who will benefit from the overhaul include “teachers, nurses, service members and millions of workers serving on the front lines of the pandemic,” Seth Frotman, a former student loan ombudsman for the Consumer Financial Protection Bureau who now runs the nonprofit Student Borrower Protection Center, told the Times.
“For too long, those who give the most to our communities and our country have been given the runaround and forced to shoulder debts that should have been canceled,” Frotman told the newspaper.
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