The Biden administration confirmed this week that officials are exploring new updates to the student loan forgiveness application process for public service borrowers. These potential changes, announced on the heels of several other improvements, are designed to streamline access to a key federal loan forgiveness program that has had a troubled history.
Here’s the latest.
Student Loan Forgiveness Had Been Elusive For Public Service Borrowers
The Public Service Loan Forgiveness program, or PSLF, has long been touted as an opportunity for borrowers who work in lower-paying jobs in the nonprofit and public sectors. PSLF can lead to full federal student loan forgiveness after a borrower makes 120 “qualifying payments” — the equivalent of 10 years — while working as a full-time employee for a qualifying organization.
But PSLF has been plagued by problems since Congress and President Bush first established it through statute in 2007. Complicated rules, haphazard implementation, and poor oversight led to numerous problems. These issues culminated in shocking denial rates for borrowers — as high as 99% for several years.
President Biden established a number of “fixes” designed to address these longstanding programs. In 2021, the administration established the Limited PSLF Waiver, which temporarily relaxed some of the usual PSLF requirements and expanded what can count as a “qualifying payment.” Over 600,000 borrowers have received student loan forgiveness under the waiver so far.
While the waiver has ended, the IDR Account Adjustment has extended many of its benefits, giving millions of borrowers another shot at student loan forgiveness. And new regulations set to go into effect this summer will codify certain elements of both programs.
Biden Administration Wants to Automate Student Loan Forgiveness Process for PSLF
In addition to these broad initiatives designed to relax some of the PSLF program’s strict and confusing rules, the Biden administration is also taking steps to improve the application process.
This week, top Education Department officials confirmed that the administration is working to automate PSLF applications for loan forgiveness, at least for federal employees. “We’re looking at doing data matches with other federal agencies, so we can automatically credit people with public service,” said Under Secretary of Education James Kvaal in remarks to the Reagan Institute earlier this week.
Currently, borrowers must affirmatively submit PSLF applications certifying their employment in order to receive credit toward student loan forgiveness. And their employer must sign the application to confirm their dates of employment. This can be a cumbersome process, particularly for large organizations or in situations where a borrower left their job long ago. Automating the application process could remove a significant barrier to student loan forgiveness for millions of federal employees.
The Education Department successfully implemented a separate data sharing initiative with the Social Security Administration to identify borrowers who are disabled and may qualify for loan forgiveness through the Total and Permanent Disability (TPD) Discharge program. Through that initiative, over 300,000 borrowers have automatically received $6 billion in student loan forgiveness, according to the department.
Other PSLF Improvements May Help Streamline Student Loan Forgiveness
The recent announcement follows several other relatively new improvements to the PSLF application process that the administration has also been implementing.
A new feature to the online PSLF application portal allows borrowers and employers to electronically sign and submit employment certification forms. This will cut down on errors associated with a paper application — where simple technicalities can result in an application’s rejection — and increase the chances that a borrower’s application will ultimately be approved.
In addition, the Education Department has been expanding its PSLF “Employer Search” database. This allows borrowers to check in advance whether their employer may qualify for PSLF. If borrower’s then use the online PSLF Help Tool to complete their employment certification, the employer’s data can be automatically pre-loaded into the application. This can effectively function as a “pre-approval,” since to be in the department’s employer database, the department must have already approved the employer as qualifying for PSLF.
“When you select an employer that is already in the employer database, it does not need to be reviewed for employer eligibility when it is received by the PSLF servicer,” says Education Department guidance. “While a manually created PSLF form will still be reviewed, it will take longer for your employer’s eligibility to be determined and your payment counts to be updated.”
Further Student Loan Forgiveness Reading
House Passes ‘Catastrophic’ Bill Nullifying Student Loan Forgiveness Credit For Millions
If The Supreme Court Rejects Student Loan Forgiveness Plan, Biden Could Do This
Lowering Student Loan Payments Just Got Easier Amid Uncertainty Over Loan Forgiveness
Student Loan Forgiveness Eligibility Expanded In 3 Ways Under New Account Adjustment Guidance