President Joe Biden (Photo by ERIC BARADAT/AFP via Getty Images)
This story is developing.
A new proposal calls on President Joe Biden to cancel student loans for all public servants who serve at least 10 years—even if they don’t meet the requirements.
Here’s what you need to know — and what it means for you.
Student loans
The Public Service Loan Forgiveness program was intended to help borrowers who work in public service or a non-profit for at least 10 years to get their federal student loans forgiven. However, since borrowers first became eligible for student loan forgiveness in 2017, about 98% of applicants have been rejected. That’s not a typo. The Student Borrower Protection Center, a leading student loans advocacy organization, says the student loan forgiveness program not only should be overhauled, but that Biden’s Education Department should take a more proactive stance: cancel federal student loans for public servants who serve for at least 10 years—regardless if they completed the necessary requirements.
The U.S. Department of Education is currently reviewing Biden’s legal authority to cancel student loans unilaterally without further congressional authorization. Will their legal review be expanded to explore the possibility of cancelling student loans for public servants?
“Teachers, healthcare providers, and millions of others who served on the front lines of America’s pandemic response deserve better than more red tape and bureaucracy– they need [Education] Secretary [Miguel] Cardona to use his power under the law to deliver the relief promised by Congress more than a decade ago,” Seth Frotman, executive director at the Student Borrower Protection Center, said.
Student loan cancellation: 10 years of service
Today, 97 student, consumer, public interest, civil rights, higher education, public health, workforce, professional, military, and faith organizations representing millions of public service workers and student loan borrowers sent a letter to U.S. Secretary of Education Miguel Cardona calling on the Department of Education to conduct an immediate 90-day review of the Public Service Loan Forgiveness program and cancel the student loan debt of all public service workers who have completed ten or more years of service. The signatories want a simpler, more streamlined way for student loan borrowers to get student loan forgiveness.
According to the letter, their student loans should be cancelled even if they don’t meet the necessary requirements for public service loan forgiveness: “Regardless of borrowers’ loan type, loan status, or repayment plan, the Department of Education must recognize and reward borrowers’ service, consistent with congressional intent.” The letter suggests that Congress should eliminate the requirements for public service loan forgiveness and instead make it automatic once public servants complete at least 10 years of service. Created by Congress in 2007, the Public Service Loan Forgiveness program is not automatic for every public servant or non-profit employee. For example, the program has several requirements, including full-time employment, at least 120 monthly student loan payments on-time and in-full, and enrollment in an eligible income-driven driven repayment plan. Student loan borrowers who meet the requirements are eligible to get student loan forgiveness on all their federal student loans.
Will your student loans get cancelled?
Biden has taken a proactive approach to student loan cancellation. Since becoming president in January, Biden has cancelled $2.3 billion in student loans. First, Biden cancelled $1 billion of student loans for 72,000 student loan borrowers and second, he cancelled another $1.3 billion of student loans for 41,000 borrowers with total and permanent disability. Some advocates have complained that Biden hasn’t moved quickly enough on student loan forgiveness, or only has focused on cancelling student loan for a relatively limited amount of student loan borrowers. America has reacted differently to Biden’s student loan cancellation. Could Biden help implement these changes to the Public Service Loan Forgiveness program? Biden is certainly open to improving the program. As a lifelong public servant, Biden has championed providing student loan relief for other public servants. Biden campaigned on streamlining public service loan forgiveness and proposed providing up to $50,000 of student loan forgiveness after five years of service (rather than student loan forgiveness after 10 years of service). Also, Biden has taken a piecemeal, targeted approach to student loan cancellation, which could gel with cancelling student loan for this constituency. That said, it’s unlikely that Biden or Congress would simply scrap the existing requirements for the program. It would be more likely that the program would be simplified to match congressional intent, be made more transparent, help more borrowers get student loan forgiveness, and offer simplified requirements.
As you navigate student loan repayment, here are some potential options to consider:
