The United States federal government previously put a temporary stop to student debt repayment that affects more than 40 million Americans in March 2020, which is set to end for many on Jan. 31, 2022.
Amid the worries of the slowly approaching deadline, the U.S. Department of Education has made changes to its Public Service Loan Forgiveness Program. The new revisions will bring expanded relief to borrowers who are employed in government establishments, including teachers, nurses, and firefighters.
Freedom From Student Loans
The crucial changes that were announced will affect an estimated 550,000 borrowers across the United States. About 22,000 of those are eligible for immediate debt cancellation that would remove up to $1.7 billion worth of loans, the agency said in a statement.
While the department launched the program in 2017 to assist public servants to pay off their loans in a shorter time, they have denied nearly 99% of all borrowers who applied. The department revealed that until now, only a little more than 16,000 borrowers have been granted loan forgiveness under the PSLF, CNET reported.
United States President Joe Biden's administration will make it easier for other borrowers to apply and be eligible for the loan forgiveness program. Authorities said that the new rules were put into effect "for a limited time as a result of the COVID-19 national emergency."
The revisions will make it so that any prior payment made by a borrower that is eligible for the PSLF program will count as a qualifying payment. This also comes as eligibility is available regardless of the loan type, repayment plan, or whether the payment was made on time or in full.
Individuals who have either federal Direct Loans or consolidated into the Direct Loan Program will be eligible to be under the revised rules. On the other hand, public service workers who have either Federal Family Education Loan (FFEL) Program loans or Federal Perkins Loans will have a deadline of Oct. 31, 2022, to move their federal student loan debt into a Direct Consolidation Loan in order to qualify, Fox Business reported.
Years of a Failed Program
Additionally, the American Federation of Teachers (AFT), one of the United States' largest teacher's unions, hailed the announcement of the revisions as a "landmark settlement." AFT President Randi Weingarten said in a statement that the agreement showed the American people the power of advocacy and collective action.
She said that the momentous occasion represented a game-changing victory for millions of educators, nurses, public employees, and other AFT members that have been struggling with monthly payments. The official noted that the continuous payments have upended the lives of millions of Americans.
The PSLF program was created by Congress in 2007 and enabled government and non-profit employees who had federally-backed student loans to apply for forgiveness. They were only required to provide proof of 120 monthly payments under a qualifying repayment plan.
However, the PSLF program's severely low success rate, which has remained at the single digits for years, has caused widespread criticism, Yahoo Finance reported.