Student loan borrowers who work in public service – think educators like CFA members, social workers, and non-profit employees – will get more flexibility in recently announced changes to a popular federal program.
U.S. Education Department officials are making it easier for graduates who paid for college with student loans to have their debt forgiven.
“This moment is an extremely important one for a generation of student-borrowers. The average amount of debt that new graduates now carry immediately upon earning a degree from a four-year institution is about $30,000, and there are many in six-digit debt,” said Daniel T. Kirsch, CFA Member and political science lecturer at Sacramento State who researches student debt. “Higher education workers – faculty, staff, librarians, coaches, and counselors – see firsthand the destructive nature of endless student debt among their students, their families, and themselves.”
The Public Service Loan Forgiveness (PSLF) program has been mired in confusion and understaffing. Advocates want a fast, clear, and simple process by which full-time public service workers can get credit for qualifying payments and soon see a zero balance on their student loan statement.
“The majority of student debt is held by women, and it is disproportionately held by people of color. The same is true of public service careers and of labor unions, so making sure the Public Service Loan Forgiveness program is functional keeps a promise made when people enter public service work, largely to historically disadvantaged populations,” Kirsch said.
The program overhaul will provide borrowers a retroactive waiver on previously disqualified loan payments and allow different repayment plans previously ruled ineligible.
To benefit from the temporary changes the department is making, borrowers – including CFA members – who have not yet applied for PSLF must do so before October 31, 2022.
According to an NPR report: “The department estimates that this waiver could have an enormous impact on borrowers, with roughly 22,000 immediately eligible to have their loans erased automatically. Another 27,000 borrowers could likewise see their debts disappear if they’re able to prove they were working in public service at the time they made payments that had been declared ineligible. By comparison, 16,000 borrowers have had their loans forgiven under PSLF since the program was created,” and began dismissing debt in 2017.