Over 130 organizations urge Biden to expand PSLF reforms and suspend payments

Federal student loan debt in the United States currently stands at nearly $1.7 trillion. The average debt carried per borrower is over $37,000. For public servants like teachers, firefighters and military personnel, who expect lower wages than those working in the private sector, a group that makes up more than 25% of the U.S. workforce, debt can be paralyzing. In 2007, the government introduced a program supposed to ease the debt burden of civil servants – the Civil Service Loan Forgiveness Scheme – which would forgive student loan debt after 10 years of regular repayments and working as a civil servant. . But he was plagued with problems.

Today, a group of 134 organizations called on the Biden administration to expand the Public Service Loan Forgiveness Program (PSLF) waiver – a waiver that has addressed major issues with the existing PSLF program that is supposed to help civil servants with student debt to become debt-free within a decade — to allow civil servants to enjoy the benefits they have been promised, and routinely denied.

They also called on the Biden administration to let the PSLF waiver operate alongside changes to the Income-Driven Reimbursement (IDR) program, which have not yet come into effect, to provide maximum benefits to borrowers. The Biden administration pushed through those changes last year, which were a resounding success — but the PSLF program could be ending too soon, the organizations say.

In the open letter to the president, the group, made up of public service workers and advocates, pointed out the inconsistency of not running the two programs simultaneously. “Because IDR credit counts toward PSLF loan forgiveness, these two programs should operate in sync to maximize efficiency, however, their current staggered timelines mean that borrowers who rely on the waiver to access the cancellation of the PSLF loan will actually be denied the later. time the benefits of the IDR adjustment,” the group wrote.

Here’s what you need to know about PSLF and IDR

Late last year, the Ministry of Education released a number of stopgap measures designed to fix parts of the PSLF that were broken and address a number of its most pressing issues, including a 98% rejection and a documented history of confusing paperwork and mismanagement. – leading millions of eligible borrowers out in the cold for the forgiveness they were entitled to.

These changes allowed 146,000 borrowers to get over $9.5 billion in student loan debt forgiven. Unfortunately, these changes are due to expire in four months, leaving hundreds of thousands of public servants in a bind and going back to the old way of doing things.

The Education Department’s plan also includes an income-based repayment system review, which will correct inconsistencies and inaccuracies in loan repayment tallies. The Income-Based Repayment System is a program that sets the amount of student loan repayments based on income and family size with the goal of making repayment affordable for those in need. The program also allows full loan forgiveness after 20 to 25 years of repayment. Like the PSLF program, federal IDR plans have been difficult and plagued with bureaucratic inconsistencies, such as borrowers encouraged to forbear for up to 36 months – the maximum time allowed – which does not count towards the goal of repayment of 20 to 25 years.

A report by NPR also found that the Department of Education’s loan servicing contractors were not accurately tracking repayments, which was preventing many borrowers from getting credit for timely payments. Under the new rules for IDR, time spent in certain deferments or abstentions will count towards loan cancellation for IDR.

Part of the problem is that the two programs, which are in desperate need of continued reform, though intrinsically linked because IDR credit counts towards PSLF forgiveness, will not fit together. The PSLF waiver must expire before the IDR review even begins.

Here’s why supporters say the program needs to be expanded to work with the IDF

The letter points out that the borrowers most in need of debt forgiveness have been overlooked: “Some borrowers who have experienced significant difficulty repaying their loans, including those who have filed for bankruptcy, those who have defaulted and those who find it difficult to repay Parent PLUS loans are explicitly or virtually excluded from these policies.

Parent PLUS loans, loans taken out by a parent to pay for the education of their dependent child, are not eligible for IDR plans. PLSF eligibility for Parent PLUS loans is based on the parent’s employment, not the dependent. Similarly, student loans suspended due to bankruptcy are not eligible, which means those in severe pain are not eligible for cancellation.

There is no doubt that the Public Service Loan Forgiveness Program (PSLF) has had a rocky road since its inception in 2007. Intended to ease the financial burden caused by student loans for those working in public service for at least ten years, the program has not worked as intended, leaving millions of people waiting despite their commitment to work in the public sector and their commitment to the PSLF program.

The extension of the waiver will also benefit borrowers from marginalized communities. According to a report by the Student Borrower Protection Center, black borrowers are “particularly likely to benefit” in the short and long term, adding that “with the full adoption of the PSLF waiver, the distance may be considerable. to close the racial gap. the burden of student debt.

The authors of the letter called on the president to address the issue in three ways:

  • Extend PSLF waiver deadline and ensure PSLF coincides with IDR revision
  • Revise both programs to “ensure that all types of borrowers receive credit for the full term since they started repaying”
  • Extend the student loan repayment pause, which is due to expire next month, until PSLF and IDR loan cancellations have been processed.

The group also requested that the administration provide clear and concise information on how best to leverage the programs to reduce the confusion and red tape that borrowers have experienced since the PSLF program’s inception.

“We believe these steps are necessary to provide the relief your administration has worked hard to provide and to ensure that all borrowers have equal access to their rights under federal law,” they wrote. In the meantime, borrowers await Biden’s announcement on what he plans to do about the broader student debt crisis — and whether he plans to deliver on his campaign promise to cancel $10,000 in student debt per borrower. .

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Elaine R. Knight