U.S. Education Secretary Miguel Cardona delivers remarks at the department’s Lyndon Baines Johnson Building in Washington, D.C., on Jan. 27, 2022.
Chip Somodevilla | Getty Images
Temporary changes to the troubled Public Service Loan Forgiveness Program have resulted in more than 110,000 people with student debt getting around $6.8 billion in relief.
The new figures from the U.S. Department of Education show how many borrowers are benefiting from the policy fixes announced by the Biden administration last year. Hundreds of thousands more could still see their debt discharged as part of the effort. The average amount of debt reduction per borrower is close to $60,000, according to the Education Department.
The public service loan forgiveness was signed into law by then-President George W. Bush in 2007, and allows nonprofit and government employees to have their federal student loans canceled after 10 years, or 120 payments. The Consumer Financial Protection Bureau estimates that one-quarter of American workers could be eligible.
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However, the program has been plagued by problems, making people who actually get the relief a rarity.
Borrowers often believe they’re paying their way to loan cancellation only to discover at some point in the process that they don’t qualify, usually for confusing technical reasons. Lenders have been blamed for misleading borrowers and botching their timelines.
The reforms under the Biden administration include reassessing borrowers’ timelines and counting some payments that were previously ineligible because, say, a borrower was unwittingly in a nonqualifying repayment plan.
How can I benefit from the new rules?
To begin, you want to act quickly, said Mark Kantrowitz, a higher education expert.
That’s because the Biden administration’s new rules for public service loan forgiveness are slated to expire on Oct. 31.
If you have either a Federal Family Education Loan (FFEL) or a Federal Perkins Loan, which don’t normally count for public service loan forgiveness but now temporarily do, you’ll need to consolidate those into direct loans with your servicer.
“It typically takes 30 days to 45 days for the consolidation to occur,” Kantrowitz said.
“Borrowers should do this even if they don’t expect to have 120 payments by the deadline, as the previously ineligible payments will count only if they do this,” he added.
In addition, borrowers will also have to prove that their work was considered public service for any stretch of time that they’re trying to get counted toward forgiveness. To do so, you’ll want to file with your servicer a so-called employer certification form for each job you’ve had throughout your timeline.
Borrowers currently jobless or not working in public service may still qualify for forgiveness now, so long as they’ve made 120 qualifying payments in the past, Kantrowitz added.
Also, keep in mind that months during the government’s payment pause and interest waiver on federal student loans, which has been in effect since March 2020, count toward the program, even if you haven’t been paying.
Some borrowers seem to be getting forgiveness automatically after the government’s auditing of these accounts.
Still, taking these steps will make sure you benefit.