Education Department Approves $8 Billion in Public Service Loan Forgiveness

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The 2008 public service loan forgiveness program had been mired by complicated eligibility rules and servicing errors that made it nearly impossible to benefit from until a Biden administration overhaul.

WASHINGTON, DC - JUNE 7: Education Secretary Miguel Cardona testifies at the Senate Appropriations Subcommittee on Labor, Health and Human Services, and Education, and Related Agencies. Hearings to examine proposed budget estimates for fiscal year 2023 for the United States Department of Education. on June 7, 2022, on Capitol Hill in Washington, DC.
(Photo by Oliver Contreras/for The Washington Post via Getty Images)

Education Secretary Miguel Cardona testifies at the Senate Appropriations Subcommittee on Labor, Health and Human Services, and Education, and Related Agencies. Hearings to examine proposed budget estimates for fiscal year 2023 for the United States Department of Education on June 7, 2022, on Capitol Hill in Washington, DC.(OLIVER CONTRERAS/FOR THE WASHINGTON POST VIA GETTY IMAGES)

The Education Department has approved $8.1 billion in student loan debt cancellation for nearly 1450,000 borrowers in the nine months since the Biden administration overhauled the failed public service loan forgiveness program.

The new figures mark significant progress the department has made since announcing major changes to the program in October 2021 – one of the several actions taken by Education Secretary Miguel Cardona aimed at canceling student loan debt for certain borrowers trapped in dysfunctional repayment plans due to misguided technical rules and mismanagement by loan servicers or for borrowers defrauded by for-profit school colleges.

The public service loan forgiveness program – a promise made by the government in 2008 to provide debt relief to teachers, nurses, firefighters and others who go into public service jobs – had been mired by complicated eligibility rules and servicing errors that made it nearly impossible to benefit from.

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The rules surrounding how a borrower can qualify and count payments toward the program were so onerous that only 16,000 borrowers have ever received forgiveness under the plan since it was first offered in 2008, according to the Education Department.

A 2019 report from the Government Accountability Office found that only 1.3% of applicants were approved for loan forgiveness.

As a result, the Education Department instituted a set of policy changes last year that, among many other things, allowed borrowers to count prior payments they made as going toward payments made under the public service loan forgiveness program – regardless of what type of loan program they have or consolidated previous loans into – so long as they worked for a qualified employer.

The changes also simplified what it meant for a payment to qualify for public service loan forgiveness, addressing one of the most pressing concerns voiced in the 48,000 comments received on the issue – that too many payments do not count toward the forgiveness program due to technical requirements like the timing and amount of payments made. In some instances, department officials said, borrowers missed out on credit toward public service loan forgiveness because their payments were off by a penny or two or late by only a few days.

Department officials estimated that the new changes would help more than 550,000 borrowers who have previously consolidated their loans, including 22,000 borrowers who will be immediately eligible to have $1.74 billion in federal student loans discharged and another 27,000 borrowers who could potentially qualify for $2.82 billion in forgiveness if they certify periods of their employment.

In total, the Education Department has canceled more than $24 billion in federal student loan debt for roughly 1 million borrowers under the Biden administration, including through settling a class action lawsuit last week that cleared a backlog of borrower defense claims.

Yet the White House continues to be under increasing pressure by progressives to go further and cancel $50,000 student loan debt for all borrowers – an action they argue the president can take on his own.

Biden has been slow-walking a decision that he said in May that he would make in the coming weeks regarding whether he plans to cancel student loan debt using his executive authority. While he’s roundly rejected proposals to cancel $50,000, he’s said he would be open to canceling up to $10,000.

Last week, Senate Majority Leader Chuck Schumer of New York, Sen. Elizabeth Warren of Massachusetts and Rep. Ayanna Presley, also of Massachusetts who is leading the push in the House, joined the leaders of the country’s largest unions in renewing their call for Biden to pursue wholesale student loan cancellation.

“We owe it to the millions of union workers who have kept our nation running during these unprecedented, challenging times,” Pressley said. “Student debt cancellation is core to any just and equitable economic recovery from this pandemic.”