The distressed student loan relief program for public service workers, including teachers, will undergo a major overhaul by the US Department of Education. Under the changes announced on October 6, tens of thousands of people are likely to have their debts canceled.
The civil service loan forgiveness program, which was established in 2007, has long been criticized for its confusing, complicated and poorly communicated application process that prevented the majority of qualified borrowers from requesting a loan forgiveness. Many refused requests were due to paperwork errors or misinformation on the part of the loan officer.
“The system broke this promise [of public service loan forgiveness] to date, but that is about to change for many borrowers who have served their communities and their country, âUS Secretary of Education Miguel Cardona said in a statement. âTeachers, nurses, first responders, the military and so many public service workers support us, especially amid the challenges of the pandemic. Today, the Biden administration shows that we support them too. “
To be eligible for civil service loan cancellation, borrowers had to follow an income-based repayment plan with a federal direct loan. They had to make 120 monthly loan payments, and those payments had to be made on time.
But now the ministry is temporarily waiving many of these requirements and doing so retroactively so that payments that previously did not meet the strict loan cancellation criteria now count as long as the borrower was in the civil service. This change will apply to borrowers regardless of their repayment plan or loan type, and the ministry will account for payments that have been paid late or that have not been paid in full.
The changes will mean that around 22,000 people will now be immediately eligible for automatic loan cancellation, according to the ministry. Another 27,000 borrowers could also have their debts written off if they can prove that they have already made payments while working in the public service.
That’s a significant increase: only 16,000 borrowers have had their loans canceled thanks to the program since its inception, NPR reported..
In total, the ministry estimates that more than 550,000 borrowers who previously consolidated their loans will now see some of their past payments eligible, accelerating their path to the two-year forgiveness.
The program has long been criticized for mismanagement
The civil service loan forgiveness program has long been the target of lawsuits, government surveillance reports and a broad NPR investigation for its mismanagement. Federal reports have found that in one year, 99% of requests were denied, and that borrowers spent months making payments only to find they weren’t entitled to a rebate.
Over the past few years, the ministry has committed to transforming the program. Last January, under the leadership of former Education Secretary Betsy DeVos, the ministry announced it would simplify red tape necessary to go through the forgiveness process.
Cardona said the department is exploring additional measures to make it easier for borrowers to progress toward loan cancellation.
On Wednesday, borrowers and advocates applauded the announced changes.
“Today we breathe a collective sigh of relief as the Kafkaesque system that has shattered the dreams of far too many people finally begins to be dismantled,” Randi Weingarten, president of the American Federation of Teachers, said in a statement. .
In 2019, AFT sued Devos on what the lawsuit alleged to be “gross mismanagement” of the federal loan cancellation program.
“AFT will continue to ensure that our members can access these changes and will fight on their behalf to ensure past wrongs are righted,” Weingarten continued. âThese wounds will take time to heal. But the Biden administration’s decision to act is a giant leap toward basic fairness and legislative intent.
The National Education Association said its members have submitted more than 48,000 letters and public comments to the education department calling for reforms to the loan cancellation program. Student loans are a significant burden on the financial well-being of educators, and educators of color are disproportionately affected, previous NEA survey finds.
Still, advocates say more needs to be done. The Center for Responsible Lending, a nonprofit research and policy group, is pushing for cancellation of public service loans after five years of service instead of 10, as well as eligibility for payment for those with asked to postpone their loans depending on the difficulties.
Still, Whitney Barkley-Denney, the centre’s senior policy adviser, said in a statement that the changes announced on Wednesday were a good first step.
âWhile there is still a long way to go, it is encouraging that this education ministry has listened to borrowers and advocates and made much-needed reforms to address some of the program’s failures,â she said. .
Borrowers who have not yet requested a utility loan forgiveness must do so by October 31, 2022 to benefit from these changes. More information can be found here.