Biden to Cement Overhaul of Student Loan Forgiveness Program for Public Service Workers

The adjustments to the program are “permanent changes to reduce the red tape,” Education Secretary

Miguel Cardona

told reporters on Tuesday.

The Biden administration is waiting for a federal appeals court to allow it to move forward with its mass debt-cancellation program, a far larger undertaking that promises to cancel up to $20,000 of student debt for individuals who make less than $125,000 a year, or married couples who make less than $250,000 a year. Republican officials in six states sued to block the program. A federal-district court in Missouri denied that the officials had standing to sue, but the decision is currently stayed as an appellate court considers the states’ arguments.

If the court allows the administration to proceed, debt cancellation could begin almost immediately for the more than 22 million borrowers who have already signed up for the program. The administration hopes to cancel as much of the debt as it can before the pandemic-era pause on student loan payments ends on Jan. 1.

Last year, the Education Department instituted a waiver for the PSLF program, which was created by Congress in 2007. The waiver was intended to make it easier for more public-service workers to qualify for debt relief, after the Education Department revealed that since its creation only 5,500 borrowers had seen their debt wiped clean under the program—a clear sign of failure, department leaders said.

Since the waiver’s implementation, 236,000 borrowers have had around $14 billion in loans forgiven.

Before the waiver, which is set to expire at the end of October, a borrower must have worked in a public-service job and have made 120 on-time payments toward repaying the debt to qualify for forgiveness. But the program was only available to borrowers who have a specific type of student loan, known as Direct Loans, from the federal government. That requirement caused confusion among borrowers unsure whether their loans qualified for loan forgiveness.

Consolidated loans—which among others can include Federal Family Education Loans, which are issued and managed by private banks but guaranteed by the federal government—will now qualify for the program, as long as the consolidation process has been completed by July, when the new regulations will come into effect.

The Education Department encouraged anyone with unconsolidated loans to begin the process before May to ensure it can be completed before the deadline.

Write to Gabriel T. Rubin at [email protected]

The adjustments to the program are “permanent changes to reduce the red tape,” Education Secretary

Miguel Cardona

told reporters on Tuesday.

The Biden administration is waiting for a federal appeals court to allow it to move forward with its mass debt-cancellation program, a far larger undertaking that promises to cancel up to $20,000 of student debt for individuals who make less than $125,000 a year, or married couples who make less than $250,000 a year. Republican officials in six states sued to block the program. A federal-district court in Missouri denied that the officials had standing to sue, but the decision is currently stayed as an appellate court considers the states’ arguments.

If the court allows the administration to proceed, debt cancellation could begin almost immediately for the more than 22 million borrowers who have already signed up for the program. The administration hopes to cancel as much of the debt as it can before the pandemic-era pause on student loan payments ends on Jan. 1.

Last year, the Education Department instituted a waiver for the PSLF program, which was created by Congress in 2007. The waiver was intended to make it easier for more public-service workers to qualify for debt relief, after the Education Department revealed that since its creation only 5,500 borrowers had seen their debt wiped clean under the program—a clear sign of failure, department leaders said.

Since the waiver’s implementation, 236,000 borrowers have had around $14 billion in loans forgiven.

Before the waiver, which is set to expire at the end of October, a borrower must have worked in a public-service job and have made 120 on-time payments toward repaying the debt to qualify for forgiveness. But the program was only available to borrowers who have a specific type of student loan, known as Direct Loans, from the federal government. That requirement caused confusion among borrowers unsure whether their loans qualified for loan forgiveness.

Consolidated loans—which among others can include Federal Family Education Loans, which are issued and managed by private banks but guaranteed by the federal government—will now qualify for the program, as long as the consolidation process has been completed by July, when the new regulations will come into effect.

The Education Department encouraged anyone with unconsolidated loans to begin the process before May to ensure it can be completed before the deadline.

Write to Gabriel T. Rubin at [email protected]