ED Expected to Overhaul Public Service Loan Forgiveness Program

By Owen Daugherty, NASFAA Staff Reporter 

The Department of Education (ED) is set to undertake an overhaul of the much-maligned Public Service Loan Forgiveness (PSLF) program, according to NPR.

Citing a source familiar with ED’s plan who was not permitted to speak publicly on the matter, NPR reports ED will unveil its revamp of the PSLF program this week.

The overhaul will take part in two phases, the news outlet notes. Immediate fixes will come in the form of ED using executive authority at its disposal to retroactively ease some of the program's rules to provide quicker relief to thousands of impacted borrowers.

In time, ED plans a long-term overhaul to make the program easier to navigate for borrowers, and it plans to go through the negotiated rulemaking process in an attempt to achieve its desired outcome.

House Committee on Education and Labor Chair Rep. Bobby Scott (D-Va.) applauded the upcoming moves by ED in response to the news report. 

PSLF “was not designed to be a puzzle or a contest. It was designed as a tool to recruit talented people into public service and recognize their contribution to our communities. I am particularly encouraged that the Biden administration is planning immediate changes that will provide timely relief to borrowers who should be entitled to loan forgiveness, as well as long-term changes to ensure the program works better in the future,” he said in a statement. 

“This is the comprehensive and sustainable solution that student borrowers deserve, and it will be a major victory for thousands of nurses, teachers, first responders, and other public service workers,” Scott added. 

The committee’s ranking member, Rep. Virginia Foxx (R-N.C.), agreed that the PSLF program is flawed, but pinned the blame on Democrats, asserting they wrote the law and are now trying to sidestep Congress by having ED overhaul the program.

“This poorly conceived program combined with a dismal rollout by the Obama administration has led to confusion and failed promises for millions of borrowers. Now, the Department believes it can simply sidestep Congress and unilaterally overhaul the program,” she said in a statement. “The truth is, Democrats were not getting the outcome they wanted, mass student loan forgiveness, so the Department is attempting to skirt the law to please progressives while leaving Congress in the dark.

As for the immediate relief, NPR reports ED plans to offer eligible borrowers working in public service the opportunity to get prior loan payments counted toward PSLF — even if those payments were going toward disqualified Federal Family Education Loans (FFEL) loans.

Additionally, borrowers will also be able to receive credit for payments made in the wrong repayment plan. In order to qualify for this immediate relief ED is making available, borrowers must apply for PSLF before Oct. 31, 2022.

All told, the initial fixes to PSLF could bring potential loan cancellation for tens of thousands of borrowers, according to NPR, and hundreds of thousands could see a decrease in the number of payments they must make in order to be eligible for forgiveness under the program.

Some potential long-term fixes could include changing rules regarding qualifying payments and giving borrowers credit if their payments are late or made in installments. Additionally, borrowers could receive credit toward their PSLF progress even if payments have been paused, citing active-duty service members and borrowers facing economic hardships as examples.

Notably, ED reportedly also wants to create a formal reconsideration process for borrowers to be able to clearly explain their situations and correct errors when necessary.

The expected changes come as the program has come under increased scrutiny in recent years. The program has long been plagued by high denial rates and confusion among borrowers seeking to obtain forgiveness.

Last week, 22 state attorneys general submitted written comments to ED urging the department to take “drastic” action to ensure that public servants have access to the promise of loan forgiveness and calling for improvements to the program. 

NASFAA has submitted a letter urging ED to use its authority to broaden the program and also identified several areas of the process that are most difficult to navigate.

Stay tuned to Today’s News for developments on PSLF changes from ED as well as coverage of the negotiated rulemaking hearings this week.


Publication Date: 10/4/2021

Ben R | 10/5/2021 5:16:19 PM

I do think ED needs to address the bifurcated system PSLF has created where one set of borrowers thinks twice about how much they borrow because their intent is to pay their loans in full, while the other need not think about how much they borrow at all.

Joel T | 10/5/2021 9:54:40 AM

I would not describe the time period under Arne Duncan with fond memories. I think we can all admit that there's a touch of overreach mixed with incompetence no matter who sits in the chair of Secretary of Education.

Michele K | 10/4/2021 9:53:19 AM

I concur with my esteemed colleague, David S. There were numerous reports out during the DeVos administration which noted how poorly these programs and others were administered during that time. I commend ED for looking for ways to make these programs accessible and work for the borrowers who qualify.

David S | 10/4/2021 9:43:35 AM

Sorry, Congresswoman Foxx, but your timeline is a bit off. The PSLF bill was passed in 2007, signed by W in October of that year. The 10 years of repayment means that the PSLF rollout happened in October 2017, when Trump was President. "[A] dismal rollout by the Obama administration..." is just a flat out lie, and frankly NASFAA, that should be pointed out in this article.

And if this was such a bad bill, Congresswoman, it was passed 14 years ago. What have you done - including when you chaired the House Education Committee- to improve it?

This is not how problems get solved.

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