Do you qualify for loan forgiveness or lower monthly payments?
CALL US TO FIND OUT! 800-820-8128

Public Service Loan Forgiveness Program is Changing

public service loan forgiveness

Recently the Biden administration launched an inquiry to collect information regarding Public Service Loan Forgiveness (PSLF). This action is the beginning of PSLF change that the Biden-Harris administration’s long-planned. 

The administration works with experts to improve the current Public Service Loan Forgiveness program and make it accessible for more borrowers. However, they also need public comment on the following areas to create a forgiveness program that completely satisfies the needs of public servants:

  • Expected improvements
  • Ease of communication process
  • Borrower experience
  • Reasons of failure
  • Barriers in the PSLF process, etc.

You can submit your review and comments online or by mail. The deadline for submission is September 24, 2021.

What is the Biden Administration’s Plan?

When Joe Biden was running for education, its administration announced a “Plan for Education beyond High School.” Biden’s education plan involved many suggested changes such as making public colleges free for people in need, raising the value of Pell-grants, simplifying Income-based repayment, etc. One of the changes recommended was about Public Service Loan Forgiveness.  

The plan involved that the PSLF program is over-complex, and it is too challenging for people who serve this country. The Biden administration claimed that a simpler PSLF program is needed, which will benefit more public servants. Therefore, it is not surprising that only 5% of applicants received forgiveness under this program.

Accordingly, the plan involved changing the forgiveness program so that applicants could get $10,000 forgiveness per year. In this way, such borrowers would receive forgiveness five times. In other words, in exchange for five-year service, borrowers would get $50,000 debt elimination. Based on this plan, prior service in public service would make applicants qualify for the program. 

The Launch of Inquiry

In accordance with the “Plan for Education beyond High School,” the Biden administration took a step to realize the goal- simplifying the PSLF and making it accessible to more public servants.

Senior Advisor and Acting Under Secretary Margetta Morgan supported this goal in her statement. She mentioned that solving PSLF challenges is a priority for the Biden Administration. Currently, the administration works with experts to fix the program, but they also need review and feedback from the public to make the program more accessible. 

With this aim, the administration created a “Request for Information regarding the PSLF.” It is possible to provide comments on the forgiveness programs online or by mail till September 24, 2021. 

The borrowers are expected to comment on difficult features of PSLF, communication process, improvement areas, borrower experiences, and other items to ensure that PSLF’s improvements would fit their needs.

The Current Public Service Loan Forgiveness Program

public service loan forgiveness

We have already discussed how the Biden administration envisioned a future, simplified Public Service Loan Forgiveness. However, there is no guarantee that the changes will exactly be like in the “Plan for Education beyond High School.” The administration works with experts and collects comments from the public to create a new PSLF program that helps a high number of public servants. 

You might also wonder why the current program is complex. Public Service Loan Forgiveness eliminates all remaining debt once borrowers make 120 payments. It is not possible to make payments in excess amounts and qualify for forgiveness in a short period. In other words, applicants have to wait a minimum of 10 years to achieve forgiveness. 

Besides, there have been complaints against loan servicers that did not process payments correctly. As a result, people made payments that did not qualify for forgiveness and lost months of progress. It should also be mentioned that the application process and eligibility requirements make forgiveness even harder to receive.

FedLoan Servicing Lawsuits

FedLoan Servicing is the loan servicer for PSLF. It is responsible for registering and monitoring payments. Unfortunately, in 2017 and 2019, the loan servicer faced several lawsuits. FedLoan lawsuits involved claims that the loan servicer failed to process payments correctly. Therefore, the payments of borrowers did not get counted for 120 qualifying payment requirements. 

So, Public Service Loan Forgiveness is Changing…

Considering all these issues with the PSLF program- its complex structure and the failure claims against the loan servicer- it makes sense to improve the program. However, for a better program, the administration should first know the reasons for failure and what should be changed. Therefore, the borrowers are asked to submit their comments to inquiry for information regarding the Public Service Loan Forgiveness.