Biden Administration Announces Public Service Loan Forgiveness Overhaul
On October 6, the Department of Education announced a comprehensive overhaul to the Public Service Loan Forgiveness (PSLF) program in response to a sustained campaign to reduce overwhelming rejection rates for borrowers seeking forgiveness.
First established in 2007, PSLF is designed to incentivize individuals with significant student loan debt to pursue careers in often lower-paying public service jobs in exchange for federal loan debt forgiveness after a period of ten years of service. Those eligible for the program include PAs and other health professionals who work in non-profit clinical settings or for non-profit universities.
However, despite the intended broad eligibility of the program when PSLF was created by Congress, most program participants have failed to achieve forgiveness due to inconsistent servicer guidance, payments made on ineligible loans or via ineligible repayment plans, or confusion regarding qualifying employment.
According to a recent survey of graduating PA students conducted by PAEA, 36% of respondents intending to enter a federal or state loan forgiveness/repayment program indicated interest in pursuing PSLF. To improve the ability of graduates and faculty to achieve forgiveness through the program, PAEA has partnered with the PSLF Coalition to advocate for administrative improvements to the program, submitting comments to the Department’s negotiated rulemaking committee in June and responding to the Department’s request for information on proposed improvements in September.
To address challenges commonly experienced by borrowers, the Department is instituting a Limited PSLF Waiver through October 2022 intended to allow borrowers with previously ineligible loans (such as Federal Family Education Loans or Perkins Loans) and those in previously ineligible repayment programs to have prior payments count for the purposes of PSLF. To obtain this benefit, borrowers will be required to submit a PSLF form, a single application that certifies employment eligibility and qualifying payments, by October 31, 2022. Borrowers with previously ineligible loans will also be required to submit a consolidation application by this date.
Beyond implementing a Limited PSLF Waiver, the Department also announced a series of other administrative changes intended to improve the experience of PSLF participants. Most significantly, payments made on or before October 31, 2021 that did not count for PSLF due to minor issues such as slight delays or inaccuracies in payment amounts will be automatically counted by the Department. Other changes include automatically reviewing denied PSLF applications for errors and strengthening the appeals process for those that have previously had their applications rejected.
Over the coming months, the Department will be conducting an enhanced outreach campaign to inform borrowers of these administrative changes and encourage those who have previously been rejected to explore their options to obtain forgiveness. Throughout this process, PAEA’s Government Relations team will continue strongly advocating on behalf of faculty and graduates seeking student loan relief via PSLF.
Members with questions about PSLF eligibility and the recent changes instituted by the Biden administration are invited to review this announcement from the Department of Education’s office of Federal Student Aid or contact Tyler Smith at tsmith@PAEAonline.org.