Biden announces steps to expand student loan forgiveness program

Biden announces steps to expand student loan forgiveness program

  • The Department of Education announced permanent fixes to the Public Service Loan Forgiveness Program.
  • These included one-time adjustments to PSLF payment numbers, along with income-based repayment plans.
  • This comes just days before the PSLF waiver expires on October 31 and is not being extended.

President Joe Biden’s Department of Education just announced fixes to make it easier for borrowers to get student loan forgiveness — permanently.

Almost a year ago, the Department of Education announced reforms to the Public Service Loan Forgiveness (PSLF) program, which aims to forgive student debt for government and nonprofit workers after ten years of qualifying payments. Included in those reforms was a temporary waiver, which expires on October 31, which allowed all previous payments, including those previously deemed ineligible, to count toward progress toward forgiveness.

Although that waiver is not getting an extension, the department on Tuesday announced a series of permanent fixes to the program to help public servants benefit from the program in the future, along with borrowers enrolled in Income Driven Repayment (IDR) plans, which promise loan forgiveness after at least 20 years of repayment. Specifically, the department will adjust the borrower’s account by providing credit against the PSLF or IDR for:

  • The borrower made repayments every month, regardless of whether the payments were late
  • In each month when the loans were in the status of qualified repayment, deferment or repayment before consolidation
  • Months the borrower spent at least 12 consecutive months in discharge
  • Months the borrower spent at least 36 cumulative months in repayment
  • And every month spent in adjournment before 2013.

This adjustment will be automatic, but the department noted that borrowers with ineligible loans—any loan that is not a federal direct loan or FFEL loan administered by the department—to receive this one-time account adjustment—must consolidate them. later than May 1, 2023. As part of the rulemaking process, this will not come into effect until July 2023.

“Today we encourage public service workers to take advantage of the temporary program changes before the October 31st deadline,” Education Minister Miguel Cardona said in a statement. “At the same time, we are taking bold steps that will automatically move more hard-working public service workers closer to forgiveness and make lasting changes to reduce the red tape that has plagued the PSLF program.”

Although the PSLF waiver is about to expire, the bill adjustment will give borrowers another chance to correct their payment number. Other enhancements to PSLF through the regulations, which will begin in July 2023, include allowing borrowers to count late payments toward forgiveness, allowing deferment and delinquency periods to count, and simplifying program criteria to make it easier for borrowers to verify employment.

During the press conference, the department official noted that the exemption is not being extended because it is “a one-time action and is related to the circumstances our country was in a year ago. Our focus is on trying to fix this program permanently and in the long run.”

However, the department recommends that borrowers apply for PSLF relief before October 31 to ensure that they can benefit from it as soon as possible. The department noted that due to the number of applicants, “processing times are taking longer than usual, but we will get to your PSLF form in the coming months.” Since it was implemented, the waiver has provided 236,000 public employees with $14 billion in debt relief, and the department anticipates these permanent fixes will help continue that progress.

“Beginning next summer, these actions will move millions of qualified borrowers closer to forgiveness by crediting all of their past payments,” Cardona told reporters Tuesday. “The results will be even more transformative, bringing even more public servants closer to forgiveness.”

This comes as the Biden administration moves forward with its sweeping student loan forgiveness plan. Although a federal appeals court recently set a temporary residence to cancel any student debt pending a final decision on the plan’s legality, the department continues to encourage borrowers to apply for up to $20,000 in aid through a form at studentaid.gov.

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