US Education Dept announces overhaul to student loan forgiveness program

Insight Online News

Washington, Oct 7 : The US Department of Education has announced an overhaul to a federal student loan forgiveness program that will ease the debt burden of as many as 550,000 borrowers who work in government agencies or the non-profit sectors.

Known as the Public Service Loan Forgiveness (PSLF), the program was intended to reward public service by forgiving the remaining federal student loan debt for qualifying public-sector workers after they have made monthly payments for 10 years, reports Xinhua news agencgt.

But the program turned out having been riddled with problems ever since it was signed into law by then-President George W. Bush in 2007, with confusion over eligibility requirements and other mis-steps and miscommunication often resulting in public service workers being denied loan forgiveness.

The reform measures announced on Wednesday include a limited PSLF waiver effective through October 31, 2022, which will expand the types of payments that student borrowers working in public service can count toward student loan forgiveness and will apply to those with direct loans, have consolidated into the direct loan program or submitted an application into the direct loan program while the waiver is in effect.

The Education Department, which said in a statement on Wednesday that the promise made in the RSLF was “largely unmet”, estimated that the temporary waiver will help more than 550,000 borrowers, among whom 22,000 borrowers will be eligible to have their loans automatically discharged “without further action on their part”.

Meanwhile, military members can count time on active duty toward the 10-year requirement of the program, even if loans were on deferment or forbearance, according to the announcement.

In addition, the agency said it will review “all denied PSLF applications and PSLF processing practices” so as to address errors.

It also seeks to simplify the PSLF application process.

According to an estimate by the Associated Press, more than 90 per cent of applicants to PSLF are rejected, only to find out that they have the wrong type of federal loan or repayment plan to be eligible for the program after having worked 10 years in a qualifying job and made what they thought to be a decade’s worth of qualifying payment.

IANS / AGENCY

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