When the Public Service Loan Forgiveness program was approved by Congress in 2007, it was designed to encourage students to take jobs in public service or at nonprofits in exchange for getting a big chunk of their student loans forgiven after 10 years.
Since then, the program has never really lived up to that aim.
“When government makes promises to people, we should be able to expect that government carries out those promises,” said Richard Cordray, COO of the U.S. Dept. of Education’s Federal Student Aid Program. “And when it doesn’t, it’s our job to pile in and figure out why and fix the problem. And that’s what we are working to do.”
Cordray joined other federal education leaders and N.J. Gov. Phil Murphy Monday for a discussion of how the Biden administration is working to correct the wrongs of the past.
As of last year, little more than 6,500 people had their loans forgiven even though there are plenty of borrowers who should have been eligible for loan forgiveness. “That seemed wrong to us,” Cordray said. “It seemed that the government had not fulfilled the promise that Congress made, and people were affected by that.”
U.S. Dept. of Education officials made some changes to the program last fall to make it easier for borrowers to apply. The changes include allowing students who have consolidated loans, which were previously ineligible, to take advantage of loan forgiveness. That effort has resulted in many more people taking part in the program.
“We’re now up from 6,500. It’s almost 130,000 who have been fully forgiven, and there’s over a million others who have had their payment counts advanced toward the magic ten-year mark.”
There’s a limited window for borrowers to take advantage of the limited waiver on requirements to get into the program. The window will close in October.
“To accept this waiver, you must apply by October 31st of this year and go to studentaid.gov,” said N.J. Gov. Phil Murphy during a roundtable discussion at the College of New Jersey. “More than 2,500 New Jersey borrowers have had their student loans forgiven, canceling out $167 million in student loan debt, which is an average of more than $65,000 per person.”
Murphy said the state is also working with the Dept. of Ed. to eliminate any administrative barriers that may have kept state employees from taking advantage of the program.
“We’re also exploring opportunities to simplify the process for local government employees. Not a ton of detail on that yet, but we’re working very productively with the US DOE on that,” Murphy said.
Since launching the waiver program last fall, the Dept. of Education has approved more than $7.3 billion in loan forgiveness for about 130,000 borrowers. That averages out to more than $57,000 per borrower.