The US Department of Education on Wednesday began to change its Public Service Loan Forgiveness Program, in a makeover it says will result in 22,000 borrowers being relieved of having to pay off their loans, totaling $1.74 billion. Over the course of a year, another 27,000 borrowers could see their loans, totaling $2.82 billion, become eligible for forgiveness.
PSLF began in 2007 with the goal of rewarding those students who work in public service sectors, including local and federal government agencies and nonprofit 501(c)(3) organizations. Borrowers can submit their loans for forgiveness to the Department of Education after making 120 qualifying payments, which is the equivalent of 10 years of monthly payments. However, since 2008, people who've submitted have had their requests denied at a rate of 98.8%.
To forgive more student loans, the Department of Education will first create a Limited PSLF Waiver that counts all prior student loan payments toward the 120 payment goal. This waiver lasts until Oct. 31, 2022. Military service members who have students loans will get their months on active duty count toward their PSLF. The application process will also get simplified, and the department will review previously denied applications and correct any errors made in the review process.
The department estimates that with the new changes, more than 550,000 borrowers who've previously consolidated loans will see two years added to their progress toward having their loans forgiven.
The Department of Education discharged $5.8 billion in student loans back in August for borrowers who had total and permanent disabilities. In March and then in June, it also forgave a total of $1.5 billion for students who borrowed money from certain for-profit schools.