Department of Education’s ‘Transformational’ Changes Improve 99% Rejection Rate

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On October 6, the Department of Education announced changes to the Public Service Loan Forgiveness Program (PSLF) that will now make new loans eligible for forgiveness that were previously ineligible, while also addressing the program’s history of a 99% rejection rate for those who apply for loan forgiveness.

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The Department stated that this policy will result in 22,000 borrowers who have consolidated loans — including previously ineligible loans — to be immediately eligible for $1.74 billion in forgiveness without the need for any further action on their part. Another 27,000 borrowers could also potentially qualify for an additional $2.82 billion in forgiveness if they can verify certain periods of employment.

All in all, the Department estimates that over half a million borrowers who have previously consolidated loans will now see an increase in qualifying payments. They added that the average borrower could receive another two years of progress toward forgiveness.

The changes announced will include:

A limited PSLF waiver that allows all payments by student borrowers to count toward PSLF, regardless of loan program or payment plan

The Department added that his waiver will allow student borrowers to count all payments made on loans from the FFEL Program or Perkins Loan Program, also waiving restrictions on the type of repayment plan and the requirement that payments be made in the full amount and on-time for all borrowers. Borrowers will have to submit a PSLF form by October 31, 2022 in order to receive these benefits.

Automatically providing credit toward PSLF for military service members and federal employees using federal data matches

Next year, the Department plans to carry out data matches to give borrowers credit toward PSLF without an application.

Reviewing denied PSLF applications for errors and giving borrowers the ability to have their PSLF determinations reconsidered

These tactics will help identify and address servicing errors or more that prevent borrowers from getting PSLF credit they are entitled to.

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Student loan forgiveness has been an area of contention this year, as the Biden Administration has approved over $9.5 billion of student loan relief — mostly for borrowers with a total and permanent disability. This has led to calls from legislators to do more, and expand the relief for a wider range of the population. However, Biden has pushed back, saying Congress will have to deal with the legislation, stating, “I don’t think I have the authority.”

As previously mentioned, the Department of Education is notorious for approving only about 1% of applications for forgiveness. “[PSLF] is going to be one of the major strategies that we take, especially when educators who have been serving for years routinely get turned away,” Education Secretary Miguel Cardona recently told CNBC. “We need to revamp that system and make it more user-friendly. We need to keep the borrower at the center, especially for people who choose public service.”

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In the Department’s statement, Cardona added, “Teachers, nurses, first responders, servicemembers and so many public service workers have had our back especially amid the challenges of the pandemic. Today, the Biden Administration is showing that we have their backs, too.”

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Last updated: October 15, 2021

This article originally appeared on Student Loan Forgiveness: Department of Education’s ‘Transformational’ Changes Improve 99% Rejection Rate


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