“We believe these steps are necessary to deliver the relief that your administration has worked hard to provide and to ensure that all borrowers are given equal access to their rights under federal law.”
Federal student loan debt in the U.S. 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 have come to expect lower salaries than those who work in the private sector, a group that comprises over 25% of the U.S. labor force — the debt can be devastating. In 2007, the government introduced a program that was supposed to lighten the debt load for public servants, the Public Service Loan Forgiveness (PSLF) program, that would forgive student loan debt after 10 years of consistent repayments and work as a public servant. But it has been plagued with issues.
Today, a group of 134 organizations called on the Biden Administration to extend the PSLF program waiver — a waiver that fixed major problems with the existing PSLF program — to allow public servants to take advantage of the benefits they were promised and routinely denied.
The group also asked the Biden administration to let the PSLF waiver work in lock step with the Income-Driven Repayment (IDR) program changes, which haven’t yet gone into effect, in order to provide maximum benefits to borrowers. The Biden Administration pushed both of these changes last year, which have been a rousing success — but the PSLF program could end too soon, the organizations say.
In the open letter to the President, the group, comprised of public service workers and advocates, pointed out the inconsistency in not running the two programs simultaneously. “Because IDR credit counts towards PSLF loan forgiveness, these two programs should operate in lock step to maximize effectiveness, however, their current staggered deadlines mean that borrowers who rely on the Waiver to access PSLF loan forgiveness will effectively be denied the later-in-time IDR Adjustment’s benefits,” the group wrote.
What You Need To Know About PSLF And IDR
Late last year, the Department of Education released a number of stopgap measures intended to fix the parts of PSLF that were broken and address a number of its most pressing issues, including a 98% rejection rate and a documented history of confusing red tape and mismanagement — leaving millions of eligible borrowers out in the cold for forgiveness they were entitled to.
Those changes allowed 146,000 borrowers to have more than $9.5 billion in student loan debt forgiven. Unfortunately, the changes are set to expire in four months, leaving hundreds of thousands of public servants in the lurch and back to the old way of doing things.
The Department of Education also plans to revise the Income-Driven Repayment (IDR) system, which will correct inconsistencies and inaccuracies in loan payment tallies. The Income-Driven Repayment System is a program that sets student loan payment amounts based on income and family size in an effort to make repayment affordable for those in need. The program also allows for complete loan forgiveness after 20-25 years of repayment. Like the PSLF program, federal IDR plans have been rocky and plagued with bureaucratic inconsistencies like borrowers being encouraged to go into forbearance for up to 36 months — the maximum time allowed — which does not count toward the 20-25 year repayment goal.
A report from NPR also found that Department of Education loan management contractors were not keeping track of repayments accurately, leading to many borrowers not getting credit for timely payments. Under the new rules for the IDR, time spent in certain deferments or forbearances will count towards loan forgiveness for IDR.
Part of the problem is that the two programs, both in desperate need of continued reform, though intrinsically tied together because IDR credit counts toward PSLF forgiveness, will not mesh. The PSLF waiver is set to expire before the IDR revision even begins.
Here’s Why Advocates Say The PSLF Waiver Needs To Be Extended To Work With IDR
The letter points out that borrowers most in need of debt cancellation have been overlooked: “Some borrowers who have experienced significant hardship in repaying their loans, including those who have filed for bankruptcy, those who have defaulted, and those struggling to repay Parent PLUS Loans, are either explicitly or practically excluded from these policies.”
Parent PLUS loans, or loans a parent takes out to pay for their dependent child’s education, are not eligible for IDR plans. PLSF eligibility for Parent PLUS loans is based on the parent’s employment, not on the dependent. Likewise, student loans put in forbearance due to bankruptcy are not eligible, meaning those suffering greatly are ineligible for cancelation.
Extending the waiver will especially benefit borrowers from marginalized communities. According to a report from The Student Borrower Protection Center, Black borrowers are “particularly likely to benefit” both short- and long-term, adding that “with full take-up of the PSLF waiver potentially going a substantial distance to closing the racial gap in student debt burden.”
The letter-writers called on the President to address the problem in three ways:
- Extend the PSLF waiver deadline and ensure PSLF coincides with the IDR revision.
- Revise both programs to “ensure that all borrower types receive credit for the entirety of the time since they first entered repayment.”
- Extend the student loan repayment pause, which is set to expire next month, until after loan cancellations from the PSLF and IDR have been processed.
The group also asked that the Administration provide clear and concise information on how best to take advantage of the programs to cut down on the confusion and red tape borrowers have experienced since the inception of the PSLF program.
“We believe these steps are necessary to deliver the relief that your administration has worked hard to provide and to ensure that all borrowers are given equal access to their rights under federal law,” they wrote.
In the meantime, borrowers await Biden’s announcement on what he plans to do with the student debt crisis overall — and if he plans to make good on his campaign promise to cancel $10,000 of student debt per borrower.