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- The Education Department announced an overhaul to the Public Service Loan Forgiveness program last month.
- It included a temporary waiver through October 2022 to allow different payment plans to count toward forgiveness.
- Seven Democrats, including Sen. Elizabeth Warren, want those reforms to be permanent.
The Public Service Loan Forgiveness (PSLF) program is a hot topic for advocates and lawmakers when it comes to student-loan reforms. The program is supposed to forgive student debt for public servants, like teachers and nurses, after ten years of qualifying payments, but it ran up a 98% denial rate in what time period? or is it still?.
That's why the Education Department announced an overhaul of the program last month to give public servants the relief they deserve through temporary measures that Democrats want to make permanent.
On Monday, seven Senate Democrats, including Massachusetts Sen. Elizabeth Warren and Senate Majority Whip Dick Durbin, wrote a letter to Education Secretary Miguel Cardona requesting reforms to student-loan repayment and forgiveness programs. One of their requests focused on the Education Department's PSLF overhaul last month, that implemented a limited-time waiver through October 31, 2022, to allow borrowers to count payments from any federal-loan programs or repayment plans toward loan forgiveness through PSLF, including programs and plans that were not previously eligible.
The department said that waiver alone would bring 550,000 borrowers closer to student-debt relief automatically, including 22,000 borrowers who will be immediately eligible for relief without any action on their part, totaling $1.74 billion in forgiveness.
The lawmakers wrote that help should not end in October of next year.
"After this time, borrowers will still need help navigating donut holes that exist in the current program," the letter said. "We believe this is consistent with the goals of the Department's issue paper, but draft regulations have not been presented yet," the letter added, referring to the department's regulatory agenda for the student-loan industry released over the summer.
Weeks after the department announced its overhaul, the American Federation of Teachers (AFT) announced it reached a settlement with the department on PSLF that will require the department to revisit the thousands of applications that were denied student-loan forgiveness.
Randi Weingarten, president of AFT, told Insider in an interview on Tuesday that her settlement and the Education Department overhaul worked "in tandem" to deliver on the promise of PSLF.
"This is huge and based upon these new principles and a correct reading by a department that wants to actually follow the intent of PSLF, we believe there's going to be overwhelming numbers of people who will now get a promise that was made to them in 2007 by President Bush and Congress," Weingarten said. "Which is: you work for the public sector for ten years, you pay ten years of your student debt, and the rest is forgiven."
The seven Democrats urged for early implementation of any considered reforms; the urgency of which is ramping up as student-loan payments are expected to resume on February 1.
FedLoan Servicing, the student-loan company that manages PSLF, is shutting down its services at the end of this year, meaning the millions of borrowers seeking forgiveness through the program will have to be transferred to a new company in a matter of months, which will present a major administrative burden for the Education Department.
And with Biden's $1.75 trillion Build Back Better (BBB) framework cutting out free community college - the only measure that would have lessened the $1.7 trillion student debt crisis - lawmakers believe student debt cancellation is the best, and quickest, way to provide relief.
"I think given how much BBB has been slashed there is more opportunity than ever to bring the heat on Biden to cancel student loans," New York Rep. Alexandria Ocasio-Cortez said last week. "He doesn't need Manchin's permission for that and now that his agenda is thinly sliced he needs to step up his executive action game and show his commitment to deliver for people."