WASHINGTON, DC – DECEMBER 16: U.S. President Joe Biden speaks at the Department of Labor on December … [+]
Approvals for student loan forgiveness under a popular program for public servants reached new heights last week, after the Biden administration announced a new wave of relief.
“Four years ago, the Biden-Harris Administration made a pledge to America’s teachers, service members, nurses, first responders, and other public servants that we would fix the broken Public Service Loan Forgiveness Program, and I’m proud to say that we delivered,” said U.S. Secretary of Education Miguel Cardona in a statement last week. Cardona and President Joe Biden announced that an additional $4 billion in student loan forgiveness under the PSLF program had been granted to nearly 55,000 borrowers, offering “life-changing student debt relief.”
Due to several efforts by the Biden administration during the last four years, PSLF has gone from a deeply troubled program with extraordinarily low approval rates to a largely successful one. The latest wave of approvals now bring total PSLF relief to $78 billion for 1,062,870 borrowers, according to the latest Education Department data.
But trouble looms for PSLF borrowers, as many have been impacted by recent legal challenges over other Biden administration student loan relief initiatives. And the future of PSLF remains uncertain as Donald Trump prepares to return to the White House.
Student Loan Forgiveness Under PSLF Has Increased Significantly Under Biden
PSLF was created through bipartisan legislation, signed by President George W. Bush, in 2007. The program was designed to incentivize working in traditionally lower-paid nonprofit and government environments, which often require not only a college degree, but in many cases, a graduate degree as well. PSLF offers federal student loan forgiveness after 120 qualifying monthly payments (the equivalent of 10 years) while meeting the program’s eligibility requirements, including working for a qualifying PSLF employer.
When President Biden first took office in 2023, approval rates for PSLF were dismal, hovering in the one to two percent range. Only a few thousand borrowers had actually received student loan forgiveness under the program. There were several factors that contributed to this including complicated program rules that were poorly communicated to borrowers, as well as problematic loan servicing, inadequate record-keeping, and poor oversight by the Education Department.
After Biden took office, the administration instituted a number of “improvements” to the PSLF program try to course-correct the longstanding problems with the program and help borrowers get relief. These efforts included the Limited PSLF Waiver, which temporarily relaxed the requirements of PSLF to allow more payments to count toward student loan forgiveness; the IDR Account Adjustment, an ongoing temporary initiative that extended many of the waiver’s features; and new regulations that expanded the criteria for qualifying employment and qualifying payments. As a result of these efforts, hundreds of thousands of borrowers have now received student loan forgiveness under PSLF.
“The PSLF Program provides an incentive for Americans to pursue and remain in careers in education, public health, law enforcement, emergency response, and other critical public service fields by forgiving borrowers’ remaining student loan balance after they have made the required 120 qualifying monthly payments,” said the Education Department in its statement. “The relief announced today includes both borrowers who have benefitted from the Administration’s limited PSLF waiver, a temporary opportunity that ended in October 2023, as well as from regulatory improvements made to the program during this Administration.”
“Over the last four years, we have made significant progress for students and borrowers – including securing the largest increase to the maximum Pell Grant award in over a decade; holding institutions accountable for taking advantage of students; and fixing broken student loan programs such as Public Service Loan Forgiveness and Income Driven Repayment,” said Biden in a statement last week announcing the latest wave of student loan forgiveness approvals.
Many PSLF Borrowers Now Facing Hurdles To Pursuing Student Loan Forgiveness
While the latest wave of student loan forgiveness under PSLF is welcome news for many, other borrowers on track for PSLF are facing increasingly concerning hurdles.
More than eight million borrowers, many of whom are on track for PSLF, have been impacted by SAVE plan legal challenges brought by Republican-led states. SAVE is an income-driven repayment plan launched by the Biden administration last year, and was intended to be the most affordable IDR program. Most borrowers who pursue PSLF must also repay their loans under an IDR plan for their payments to qualify toward eventual loan forgiveness, and many selected the SAVE plan or switched from other IDR programs. But as a result of the SAVE plan legal challenges, millions of borrowers have been forced into a forbearance, which does not count toward student loan forgiveness under either IDR or PSLF.
The Education Department has advised borrowers pursuing PSLF that they have options to get back on track for student loan forgiveness, such as by pursuing the new PSLF Buyback program or changing to a different IDR plan. But PSLF Buyback has restrictive eligibility rules, and many borrowers who do qualify are reporting extremely slow processing. IDR processing has also largely been paused since August, and the department warns borrowers to expect lengthy delays when applying to change plans. The Biden administration recently reopened the ICR and PAYE plans to give people more options to pursue loan forgiveness, but the facts on the ground pose a significant barrier for many borrowers.
The Future of Student Loan Forgiveness Under PSLF Remains Uncertain
Despite the problems that many PSLF borrowers are currently facing, the good news is that student loan forgiveness under the program can’t simply be eliminated unilaterally by the incoming administration. PSLF is a statutory program, which means it would take an act of Congress to fundamentally change or repeal it. That could happen, given that Republicans will be in control of both the House and the Senate (as well as the presidency). But with exceedingly narrow margins, especially in the House, a full PSLF repeal is far from assured. When Trump was last in the White House, his administration did propose repealing PSLF; but that proposal would have grandfathered in current borrowers, and it ultimately never went anywhere.
However, the Trump administration could still make it harder for borrowers to pursue student loan forgiveness through PSLF. A more hostile Education Department could pursue regulatory changes that might undo some of the improvements made by the Biden administration, including eliminating the PSLF Buyback option. And if Congress cuts funding to Education Department programs or eliminates the department altogether, it could jeopardize program operations and oversight. That could lead to more errors and longer processing delays for borrowers applying for student loan forgiveness under PSLF and other programs.