Greater than 1 million student loan borrowers have now qualified for Public Service Loan Forgiveness.
The milestone comes because the Biden administration on Thursday announced the most recent batch of forgiveness for public-sector employees, with greater than 60,000 borrowers getting $4.5 billion of debt canceled. In all, nearly $74 billion in debt has been canceled through this system previously three years.
This “is not only a number. It’s life-changing debt relief for over one million individuals who now have more respiration room to purchase homes, start small businesses, save for retirement and more,” Natalie Quillian, White House deputy chief of staff, said on a call with reporters.
Public Service Loan Forgiveness, or PSLF, was created in 2007 to supply loan relief for borrowers who spend at the very least a decade working in (often low-paying) government or nonprofit jobs. Borrowers need to make 120 qualifying monthly payments while working for an eligible employer to get their loans canceled.
Previously, PSLF was infamous for its high denial rates. On the time, the applying process was complicated, borrowers commonly reported confusion around eligibility requirements, and stories about loan servicers miscounting payments were common.
In 2021, lower than 7,000 borrowers had successfully qualified for loan forgiveness through PSLF — fewer than 3% of all applicants.
“For too long, this system did not live as much as [its] commitment,” Quillian said.
But approval counts have surged following the Biden administration’s efforts to overhaul this system. The White House rolled out a temporary waiver that gave borrowers credit for past payments that didn’t count due to administrative errors and enacted everlasting changes that simplified the eligibility requirements and the method for certifying employment. More recently, the administration moved all PSLF management to Studentaid.gov with the goal of allowing borrowers to more easily track their progress toward forgiveness.
“That is something that we’re extremely happy with — not only the number but in addition that the method is fixed in order that it could possibly proceed providing forgiveness for public servants for years to come back,” Secretary of Education Miguel Cardona said.
With just a couple of weeks to go before the presidential election, he also painted the PSLF changes as a win for the Biden administration, comparing the recent approval numbers to those under former President Donald Trump. Trump, in fact, is running against current Vice President Kamala Harris.
Why PSLF is so essential
Improving the accessibility and reliability of PSLF has far-reaching economic and social advantages, in accordance with a separate evaluation published Thursday from the White House Council of Economic Advisors.
This system was designed to assist critical jobs — think: teachers, social employees, nurses and doctors — be more financially viable. However the CEA evaluation shows there’s still work to do.
Over the past twenty years, public-sector employees earned, on average, 93 cents for each dollar paid to private-sector employees of comparable ages and education attainment. The pay discrepancy between the 2 sectors has gotten worse lately, too, increasing from 2.8% in 2011 to 9.5% in 2023. And a few professions have a rather more dramatic gap. Teachers, for instance, earned nearly 29% less in 2022 when put next to all other full-time employees after accounting for age and education.
That, coupled with the high cost of attending college, can discourage people from selecting these careers. That matters because if too few people pursue public-sector positions, there are a number of ripple effects. The CEA points to vacant teaching positions and high turnover at schools, in addition to longer wait times for medical appointments and inadequate access to primary care doctors, as examples.
Other Biden administration student debt relief efforts
The most recent PSLF discharges come as two of the Biden administration’s other major attempts at student debt relief remain blocked within the courts. The brand new Saving for a Invaluable Education repayment plan and the “Plan B” to forgive some debts of borrowers in additional specific situations, like those that’ve been repaying for many years or who’ve a financial hardship, are each still on hold.
Still, the Education Department has had considerable success at granting debt relief through existing programs. Other than Public Service Loan Forgiveness, some 1.4 million borrowers have had loans forgiven through income-driven repayment plans, including those that benefited from a one-time payment count adjustment; greater than 1.6 million borrowers who were cheated by their schools or handled institution closures have had their debts canceled; and greater than 500,000 borrowers with a complete and everlasting disability have had their debts discharged.
All told, the administration says it has forgiven $175 billion in student debt for greater than 4.8 million Americans.
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