A ray of hope for massive student debt relief

Teachers, classroom aides, other school-related personnel, professors, campus workers, nurses, medical assistants and so many more who work for the public good are about to get what they’ve wanted for years: the student debt relief the government promised them.

U.S. Secretary of Education Miguel Cardona explained the plan at an AFT telephone town hall Oct. 6: The infamously obstructive system of student debt relief called Public Service Loan Forgiveness is changing, and half a million borrowers finally have a clear path to discharging their loans. This includes some 22,000 borrowers who could have the remainder of their debt canceled without further action.

“What we’re talking about today is another way we’re trying to honor our educators,” Cardona told the nearly 15,000 call participants. “You shouldn’t have to jump through hoops. If you give 10 years of service to the community, you should have your loans forgiven.”

Good intentions gone bad

First introduced as a bipartisan policy in 2007, PSLF, as it is commonly known, was designed to erase student debt for public service workers after they have made 10 years of on-time payments. At first a straightforward proposal, the system evolved to become an impossible labyrinth of obscure requirements around the types of loans that qualify, and a mind-boggling intolerance for the tiniest of errors—like misplaced signatures or payments that were a few cents off.

“The PSLF program has never lived up to its promise,” said Under Secretary of Education James Kvaal. “It instead it is full of tricks and traps and eligibility restrictions that make it extremely complicated.”

Such complications meant that in 2017, when the first borrowers qualified for loan relief, just 1 percent of applicants were granted relief. At the time, then-Education Secretary Betsy DeVos made matters worse by siding with loan servicers who misled borrowers and prevented them from getting the relief they’d been promised. The situation was so bad that AFT President Randi Weingarten joined eight AFT members to sue DeVos over it.

“It seemed like the former [education] department wanted to reject people’s applications as opposed to approving them,” said Weingarten, calling the confusing system a “Kafkaesque maze.” Now that the Biden administration has shifted gears, people are so eager for change that more than 48,000 filed comments when the Education Department invited them to share their experiences with PSLF.

Personal setbacks

Physician assistant, educator and AFT member Jessica Saint-Paul paid her loans faithfully for 10 years, and the year she planned to celebrate her loan forgiveness—2018—she discovered she had the “wrong loan” and had to start from scratch. Until she attended an AFT student debt clinic, she didn’t know about income-based repayment plans, which would have saved her from going into forbearance during times of financial hardship. The fact that her loan servicer never informed her of her options and that she lost so much money in the process? “That’s what hurts the most,” she says.

Student debt often shapes every aspect of borrowers’ lives. For Jessica Giordano, a genetic counselor who works in OB-GYN, that means “living with random roommates from Craig’s List, working multiple jobs, working nights and weekends just to come up with the money.” When she called to check on her loans, her servicer told her she had the wrong type of loan—after years of making payments she thought would count toward PSLF—and she sobbed at her desk. “It was an absolutely devastating thing to hear,” she says.

Cardona said the Biden administration is ready to make it right. “You’ve done so much to help our community, and it’s our turn now to serve you,” he told participants in the town hall call. “You were made a promise, and it’s time for us to deliver on that promise.”

“These are major reforms that certainly initially will mean tens of thousands of educators will eventually have a path toward student debt forgiveness,” said National Education Association President Becky Pringle. “In the lives of those individual people it’s going to be life-changing.”

How to get on the path to forgiveness

The biggest change in the PSLF program will be a waiver that, for a limited time, will dismiss the “wrong loan” problem. “Under the new rules, any prior payment made will count as a qualifying payment, regardless of loan type, repayment plan, or whether the payment was made in full or on time,” reads the department’s waiver website. “All you need is qualifying employment.”

This means that loans that were rejected because they were not in an income-driven repayment program will qualify. Borrowers with unqualifying Federal Family Education Loans, Perkins loans or other federal loans that are not direct loans can consolidate these into direct loans by Oct. 31, 2022, and their payments will still qualify toward the 120 required PSLF payments.

“That step alone will help some 550,000 borrowers get closer to forgiveness by about two years,” said Kvaal.

Another significant change will affect members of the military. Every month they are on active duty will count toward progress on the 120 monthly required payments for PSLF, even if payments were put on hold during that time.

The Education Department will also use data-matching programs to automatically give borrowers who work for the federal government credit for their monthly payments, rather than forcing each borrower to file their own paperwork. Kvaal said the department is looking at a similar arrangement for state and local government and nonprofit organizations.

And finally, the department will review denied applications and engage an outside company to audit its processes to be sure any errors are corrected. “We are doing everything we can to fix past mistakes,” said Kvaal.

Making it work

Kvaal emphasized that borrowers should be sure their contact information is up to date with the department and their loan servicers, so that notifications and changes will reach them. Borrowers must submit a PSLF form on or before Oct. 31, 2022, to have previously ineligible payments counted. The form can be found at StudentAid.gov/PSLF.

For further guidance, Weingarten pointed members to Summer, the student loan assistance organization the AFT has partnered with to help individuals navigate their specific path to loan relief. Summer is a member benefit for AFT members and can be accessed at aft.org/benefits/summer.

[Virginia Myers]