Senate Democrats Introduce Bill to Overhaul Public Service Loan Forgiveness Program
By Allie Arcese, Director of Communications
By Allie Bidwell, NASFAA Senior Reporter
A group of 15 Democratic senators last week introduced legislation that would expand the types of loans and repayment plans eligible for borrowers seeking loan forgiveness through the Public Service Loan Forgiveness (PSLF) program. The Department of Education (ED) has come under fire for the implementation of the program, a lack of guidance and clear communication to borrowers, and a lack of public information on the number of borrowers projected to benefit from the program.
The bill—the “What You Can Do for Your Country Act of 2019”—was introduced by Sens. Kirsten Gillibrand (D-NY) and Tim Kaine (D-VA), and was co-sponsored by 13 other Democratic senators and Sen. Bernie Sanders (I-VT), who caucuses with Democrats. In addition to Gillibrand and Sanders, several of the bill’s co-sponsors—Kamala Harris (D-CA), Amy Klobuchar (D-MN), Cory Booker (D-NJ), and Elizabeth Warren (D-MA)—have all declared their candidacy for the 2020 presidential election.
ED in May announced a process to reconsider denied applications from certain borrowers, and in November announced the creation of an online help tool to assist borrowers in navigating their PSLF applications. In the last several years, lawmakers, government agencies, and consumer advocates have criticized—and sued—both ED and its contracted servicer for the PSLF program, FedLoan Servicing, for allegedly causing borrowers to lose their benefits and for not clearly explaining the requirements to become eligible for loan forgiveness.
“The current [PSLF] program is a bureaucratic nightmare, and the Department of Education is failing to meet its obligation to help ease the student debt burden for our nation’s public servants,” said Gillibrand, in a statement. “As a result, millions of teachers, social workers, members of the military, nurses, public defenders, and countless others have been denied the support they have earned through their hard work and service to our communities. It’s time for Congress to fix this program and create a fairer and simpler process for public servants seeking loan forgiveness.”
Currently borrowers who took out loans through the Federal Family Education Loan (FFEL) program are ineligible for PSLF. The newly-introduced bill would make all types of loans eligible for forgiveness, and would allow borrowers to consolidate their loans without risking ineligibility. It would also make borrowers enrolled in any federal student loan repayment plan eligible to receive forgiveness. Current law prohibits borrowers enrolled in the extended or graduated loan repayment plans ineligible, except under some limited circumstances permitted under the Consolidated Appropriations Act of 2018, which ED is currently implementing under a program they are calling Temporary Expanded Public Service Loan Forgiveness (TEPSLF).
The bill would require ED to provide borrowers with more information about program eligibility, including “how many payments are counted and why,” and how to dispute an issue with determining that progress. The bill would also allow borrowers who pay more than their required monthly payment to have the additional amounts applied toward forgiveness. Currently, payment amounts above the required monthly payment are treated as pre-payment on the next month’s loan payment obligation and are not counted in the 120 payments that qualify toward forgiveness.
Aside from seeking to adjust functional issues in the program, the bill also suggests one major change: allowing borrowers to receive partial forgiveness after five years of public service, instead of waiting to receive full forgiveness after 10 years.
“Firefighters, teachers, servicemembers, and nurses have put in years of service – yet are getting denied the loan forgiveness they’ve earned,” Kaine said in a statement. “This bill is an opportunity to ease the burden of debt on our public servants by simplifying the loan forgiveness program. I hope my colleagues will join Senator Gillibrand and me to pass this legislation and provide those who serve their community and our nation the relief they deserve.”
Publication Date: 4/15/2019
David S | 4/15/2019 1:42:40 PM
James, I'd be completely on board with you if our economy didn't also pick salary winners and losers based on the tax status of employers. In the scenario you drew up, these two surgeons could have attended med school together and borrowed the same amount, but are unlikely to be making the same money.
James C | 4/15/2019 12:12:17 PM
PSLF should be done away with. Picking winners and losers based on the tax status of one's employer is not the way to handle the student loan debt crisis we have. If you are a surgeon working for a 501 (c) (3) organization you can have hundreds of thousands in loans forgiven yet if you work for a for profit group you won't have them forgiven. And should very high earners have any loans forgiven?? We need a universal loan forgiveness program where after xx number of years of income based repayment your loans will be forgiven if you earn under xx amount of dollars.
David S | 4/15/2019 10:41:59 AM
Those of us who have been in this business long enough to remember schools choosing between FFEL and DL will recall that we were told that the loans were identical to the borrower, just a different delivery system. That never happened, as various repayment plans, borrower defense, and PSLF have only been available for DL borrowers. This bill, 25 years later, would at least move things closer to that original promise.
I know that some see this bill as dead in the water, it'll never pass a Republican Senate. But laying the groundwork for Reauthorization requires some negotiating. You start your negotiating high by asking for the sun and the moon and the stars, while Republicans are almost unanimously on record as wanting to kill PSLF altogether. So maybe this way we get the sun and/or the moon...not everything we want, but a lot more than what we could otherwise wind up with. Also glad to see this co-sponsored by some of the highest profile Dems in the Senate.
Brian O | 4/15/2019 8:19:26 AM
it's about time
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