Op-Ed: Deadline Looms for Borrowers Seeking Public Service Loan Forgiveness

As the Biden administration debates loan forgiveness, some 3 million student borrowers—many of them teachers—are eligible for more than $100 billion in debt relief. But do they know?

Sarah Turner

A temporary relaxation of the requirements to qualify for the Public Service Loan Forgiveness program could save millions of borrowers billions of dollars—but few of those borrowers have so far accessed the potential benefits.

The situation offers an insight into the challenges of the student debt issue. Pragmatic solutions seem to gain little traction on social media and in the news.

The loan-forgiveness fights have attracted so much attention, and dragged on so bitterly for so long, in part because they inspire a deep ideological, almost religious, fervor. Demonstrators hold signs talking about a “jubilee” or debate the fairness, or unfairness, of transfers between people whose parents saved for college (or inherited enough to pay for it), those who couldn’t afford to go at all, and those who chose to finance the education with loans.

The reality of the Public Service Loan Forgiveness program is not an ideological or philosophical question of the introduction of a new program. It is, instead, more about nuts-and-bolts execution of an existing policy—in this case, a program that, in 2022, is still inviting applicants to transmit documents by fax and postal mail.

For teachers—as well as a broad array of public-service workers including social workers, firefighters, and many healthcare workers—the Public Service Loan Forgiveness program offers potential full forgiveness of student loans for those with a decade of service and loan payments. For most potentially eligible workers, however, the benefits have failed to materialize. Communication about program requirements was limited, producing confusion about which loans and payments qualified, while loan servicers provided misleading guidance and kept inadequate records.

A Department of Education administrative waiver set to expire on October 31, 2022, allows for massive retroactive adjustments in qualification requirements, making many public-service workers eligible for full forgiveness and, in some cases, refunds.

Twenty-two percent of potential Public Service Loan Forgiveness recipients are teachers, making them the single largest occupational group eligible for waivers. Overall, teachers could expect substantial debt relief, with overall balances falling to $22.4 billion from an estimated $55.1 billion. Individual eligible teachers could expect to receive an average of about$38,151 in relief.

Public Service Loan Forgiveness benefits are not automatic, though. Unless borrowers are active readers of the Department of Education press releases, they may not even know about the administrative changes that expand eligibility. Less than five percent of borrowers estimated to be eligible for immediate Public Service Loan Forgiveness relief have navigated the application process so far. The lack of take-up is attributable both to lack of information and to the administrative obstacles imposed on those who do find out about the forgiveness opportunity.

This article was originally published and featured by Education Next. Read the full article here.

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