Changes in the Student Loan Forgiveness Program & You

If you are one of over 550,000 borrowers who were disappointed by the failed student loan forgiveness program, better news is on the horizon. Recent changes proposed by the current administration have the potential to make good on what many public service workers up to now have called a broken promise.

When the Public Service Loan Forgiveness Program (PSLF) was introduced in 2007, it gave hope to hundreds of thousands of public service workers who were promised a clean slate once ​120​ qualifying monthly payments were made toward their student loans.

Years into their repayment, many borrowers discovered they had the "wrong kind of loan." Consequently, the money they had paid in didn't count as qualifying payments. Upset borrowers were told that none of their payments counted and, after switching to the "right" kind of loan, their progress would start over at zero.

So far, President Joe Biden's administration has already given $10 billion in student debt relief to soldiers, disabled borrowers and victims of fraud by for-profit schools. House Democrats want more and are pushing for the president to use executive action to broadly forgive up to $50,000 in student loan debt. Some representatives have called on Biden to release his student loan forgiveness memo by ​Oct. 22, 2021​.

The changes most recently proposed take aim at the hundreds of thousands of public servants who were disappointed by the faulty design of the PSLF program.

The PSLF Waiver, part of COVID-19 relief, allows borrowers to receive credit for payments they have made on "wrong" loans that were previously not counted toward a qualifying repayment plan.

This means the number of qualifying payments you get credit for will go up and, in the event you have made more than 120 payments, you will receive a refund for your overpayment.

To be eligible, student loan borrowers must consolidate their current loans into the Direct Loan Program by ​Oct. 31, 2022​.

​Consider also:​ How to Consolidate Student Loans

Another significant change comes for military service members, who will now receive credit for their months of service in active duty. Federal Student Aid promises to do the legwork of reaching out to service members eligible for this opportunity, which is a substantial change for a program that has been notoriously difficult to navigate.

​Consider also:​ Student Loan Relief Extended

The U.S. Department of Education also plans to review all previously denied applications – no small task for a process estimated to have a ​99 percent rejection rate​ of all submitted applications.

The Student Borrower Protection Center launched a full investigation of the program, including a detailed account of minor errors at the root of applications. In fact, all data related to the success of PSLF paints a very bleak picture of the program to date.

The U.S. Department of Education calls these application errors "a particularly worrisome barrier to PSLF access" and announced its commitment to review accounts with a new loan servicer.

In addition to these efforts, the U.S. Department of Education has recognized the many shortcomings of the program as well as the transparency of the process. Improvements proposed include:

• ​Simplification of application:​ Federal Student Aid pledges a smoother online experience, a better database of qualifying employers and automation of the certification process.
• ​Improved outreach:​ Too many borrowers don't know if they qualify or what steps they need to take for forgiveness. A new and extensive campaign is planned to notify and educate borrowers.
• ​Use of rulemaking to push through changes:​ The Department of Education intends to solve the problems of PSLF through the process of rulemaking.

Each of these is good news for student loan borrowers.

The first thing you need to do is keep on top of these changes as they unfold. Check the Federal Student Aid website often for updates and to check for eligibility rules. In the meantime:

• Verify your employment eligibility.
• Check out what type of loans you have and covert, if necessary, ​by Oct. 1, 2022​.
• Submit a PSLF form to the company that holds your loan ​by Oct. 31, 2022​.

Those are the basics. There is a lot of information to check out, depending on what type of loan you have, where you work and how to proceed. Check out the FAQ page of the Student Aid website and start lining up your student loan forgiveness today.

​Consider also​: How to Find Out the Credit Provider for My Student Loan