Student loan forgiveness changes could spell relief for more public sector workers

The program had been criticized by borrowers for being hard to access

Members of Congress and congressional staff expressed optimism that a Department of Education overhaul of a loan forgiveness program will make it easier for public sector employees to benefit. (Bill Clark/CQ Roll Call)
Members of Congress and congressional staff expressed optimism that a Department of Education overhaul of a loan forgiveness program will make it easier for public sector employees to benefit. (Bill Clark/CQ Roll Call)
Posted October 6, 2021 at 6:09pm

Congressional staff and members of Congress are optimistic that an overhaul announced by the Department of Education will make positive changes in a troubled student-loan forgiveness program for public sector employees and members of the military.

“We hope this change will help to alleviate the economic hardship that so many endure as a repercussion of student loans,” said Herline Mathieu, president of the Congressional Black Associates. 

Mathieu’s group, which represents Black staffers in the House and Senate, released a statement Wednesday saying the overhaul could benefit people who have dedicated their careers to public service — especially Black Americans. 

“When we examine the racial component of the student loan debt crisis it unveils a gross disparity which for far too long has overburdened Black college graduates,” the statement said, pointing to a Brookings study that found Black college graduates typically owe $52,726, nearly double what a white college graduate typically owes. 

“This tremendous debt makes it nearly impossible to save money, much less finance homes, leaving thousands of Black Americans financially debilitated, and this ultimately contributes to the existing racial wealth gap,” Mathieu said.

The changes, announced by the Department of Education on Wednesday, make more former students repaying their loans eligible to take advantage of the Public Service Loan Forgiveness program. The agency said it would go back and review denied applications and give people the chance to have their applications reconsidered. 

It also provides a waiver to borrowers making payments on loan programs or payment plans that were previously ineligible to allow their payments to count toward loan forgiveness.

The agency said in a release it believes that tens of thousands of borrowers could immediately be eligible for loan forgiveness without taking further action and that more than a half-million borrowers could see an increase in their number of qualifying payments. 

The program, created in 2007, allowed employees working for government organizations or nonprofits to gain loan forgiveness after 10 years. But many borrowers reported being given bad advice by loan servicers about the program or being denied access to the program entirely after paying for years on their loans. 

The DOE’s overhaul targets several longtime issues with the program that have drawn the ire of lawmakers on both sides of the aisle. 

Earlier this year, Sens. Maggie Hassan, a New Hampshire Democrat, and Florida Republican Marco Rubio led a bipartisan bill to allow members of the military deferring student loan payments while on active duty to count their service toward student loan forgiveness.

“Student loans should never be a deterrent for entering into public service, including the military,” Hassan said in a statement. “We must make sure that we are fostering the next generation of leadership and supporting those Americans who work so hard to keep our country safe, secure, and free.”

The department also created a new website, www.studentaid.gov/pslfwaiver, where borrowers can get more information about the program and changes. 

Sen. Tim Kaine, a member of the Senate Health, Education, Labor, and Pensions Committee who advocated for an overhaul of the program, said on a press call Wednesday that the changes could also go a long way to help borrowers working on Capitol Hill. 

"Congress has a number of public service loan programs, but what we found in the last administration is public servants were applying to get loan forgiveness, and the administration was turning them down," the Virginia Democrat said.

He also praised the Department of Education’s decision to review denied loans, claiming that during former President Donald Trump’s tenure, the agency wasn’t as interested in helping borrowers doing public service. 

“There was, I believe, an intentional effort to just make them ineffective because they wanted to basically demean the notion that public service was worthwhile," he said. 

Niels Lesniewski contributed to this report.