Permanent Fixes for a ‘Broken System’

Inside Higher Ed

Katherine Knott

October 26, 2022

A year after announcing a temporary overhaul of the Public Service Loan Forgiveness program, the Biden administration is ready to make several of those changes permanent in an attempt to fix what officials call “a broken system” that shortchanged the country’s public servants.

“We’re taking bold steps that will automatically move more hardworking public service workers closer to forgiveness and making permanent changes to reduce the red tape that riddled the PSLF program,” Education Secretary Miguel Cardona said during a press briefing Tuesday. “The Biden-Harris team is as committed as ever to upholding the promise of PSLF and ensuring borrowers who devote their careers to teaching our children, strengthening our communities and serving our nation get the relief they’ve earned.”

Under the Public Service Loan Forgiveness program, individuals working at a nonprofit or in a government job are supposed to be eligible for debt relief after making payments for 10 years. But that program has not lived up to its promise, multiple investigations have found over the years. In fact, fewer than 7,000 borrowers qualified for relief under the program, which had a 98 percent rejection rate.

“People found it nearly impossible to get public service loan forgiveness,” said James Kvaal, education under secretary. “Borrowers who made years of student loan payments would later learn they were on the wrong repayment plan. Others made progress towards forgiveness only to find out that they’d have to start over from scratch after consolidating their loans. These are idealistic people who want to [give] back to their country who made career decisions based on a promise of loan forgiveness, and they were shortchanged.”

The final regulations for the program, which will go into effect in July 2023, will allow borrowers to count late or partial payments and to count certain periods of forbearance or payment suspension toward PSLF, according to a department fact sheet. Additionally, those who have loans that don’t qualify for the program but consolidate into a direct loan managed by the federal government will receive credit for payments made before consolidation. Previously, those individuals would lose all progress made toward forgiveness. The department also is planning to simplify and standardize the criteria to qualify for the program. Working 30 hours a week will be considered full-time, while adjunct faculty will receive a credit of 3.35 hours of work for every credit hour taught.

The department is planning to issue a separate final rule about how an eligible employer is defined, including whether for-profit employers count.