A Brief History of Public Service Loan Forgiveness
2007: Congress creates PSLF
In the last year of President George W. Bush’s presidency, Congress passed the College Cost Reduction and Access Act with bipartisan support. It promised to ease the burden of repayment of student loan debt—a burgeoning problem caused by skyrocketing college tuition—through a number of modifications to existing programs and by creating new ones. The Bush administration touted the bill’s expansion of Pell Grants, increasing the amount of money low-income families could receive toward tuition. Further, it reduced the interest rate on future federal Stafford Loans, cutting them in half over the following few years.
Perhaps the largest lasting impacts, however, came for borrowers already in repayment. The Act created two programs that were designed to ease the ongoing cost to borrowers and to help them eliminate their loans if they were working in public service. Although the White House did little to advertise these programs, Income-Driven Repayment (IDR) and Public Service Loan Forgiveness (PSLF) have remained integral parts of the federal student loan system and are regular news items in the ongoing student debt crisis.
2012: Implementing and tracking loan forgiveness
When PSLF was created, there was little guiding information to go with it. It wasn’t until 2012 that the Department of Education created the Employer Certification Form (ECF) that allows borrowers to find out if their current and past employers qualified them for PSLF and track the number of qualifying payments made towards it. Unfortunately, most borrowers still struggled with the complexities of the program’s qualification structure. After 10 years had elapsed since its inception and the first class of borrowers were eligible for forgiveness, shortcomings and failures immediately became evident as 99% of applicants were denied, which led to damning reports and the resignation of a student loan servicer watchdog.
2018: Temporary fixes and new tools for borrowers
After the disastrous results of 2017, both Congress and the Dept. of Ed. moved to streamline the process and provide options for some rejected borrowers. Some of the most common rejections were due to non-qualifying employment—addressed in 2012 by adding the ECF—and by being on a non-qualifying payment plan. To amend the latter problem, the Consolidated Appropriations Act of 2018 temporarily expanded PSLF (TEPSLF), which allowed borrowers who met all other qualifications for the program except for their payment plans to be considered for forgiveness. The Act, however, only allows a certain total amount to be forgiven and once that figure is met—on a first-come, first-served basis—the program will end. The Dept. of Ed., for its part, created the PSLF Help Tool to guide borrowers through things like filling out the ECF form and applying for forgiveness to make the process more user-friendly.
2020–2021: The COVID-19 Pandemic, the Present, and the Future of PSLF
Early in 2020, as the world grappled with the spreading coronavirus that would come to be known as the COVID-19 pandemic, Congress passed the CARES Act. Among other measures meant to shore up the economy, the Act had a number of implications for student loans that remain until now: payments were suspended, interest rates were frozen at 0%, and employer recertifications were extended until post-forbearance (see this post for more details). These benefits are set to expire at the end of September, 2021, and have a lot of folks wondering what’s coming next for the student debt crisis. For those pursuing PSLF, they’ve had the added benefit that these months of forbearance have counted toward their 120 qualifying payments required for forgiveness. The economy, however, remains fragile, and many are wondering what will happen as student payments resume in the coming months—not to mention the end of expanded unemployment benefits for millions of Americans.
So what comes next for millions of borrowers and the over $1.5 trillion dollars of federal student loan debt? Pres. Biden has talked about $10,000 blanket forgiveness for borrowers, while other members of his party have called for $50,000. Absent from the conversation on the Hill, however, seems to be Biden’s promises of reforming and expanding PSLF, such as implementing the What You Can Do for Your Country Act of 2019 (more on that here). Organizations such as the ACLU, NAACP, and Student Borrower Protection Center have called on the President and Secretary of Education to address the student debt crisis, but little has yet to manifest. Advocacy organizations, however, haven’t given up the fight, and Navigate is among those pushing lawmakers to come up with a lasting solution.
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For those pursuing PSLF, they’ve had the added benefit that these months of forbearance have counted toward their 120 qualifying payments required for forgiveness. The economy, however, remains fragile, and many are wondering what will happen as student payments resume in the coming months—not to mention the end of expanded unemployment benefits for millions of Americans.