U.S. Department of Education expands Public Service Loan Forgiveness Program

Key Takeaways

On October 6, the U.S. Department of Education (ED) announced an overhaul of the Public Service Loan Forgiveness (PSLF) Program. Established in 2007, the PSLF Program promised to forgive student loans for qualifying public sector workers who made on-time federal student loan payments for 10 consecutive years. The changes, which ED intends to implement over the next year, aim to rectify administrative hurdles that have significantly hampered the program’s effectiveness and reach. County employees are among those public service workers who may benefit from debt relief—both retroactively and in the future—under the expansion.

Though the PSLF Program seeks to incentivize jobs in public service by offering federal student loan forgiveness to non-profit and government employees, most qualified borrowers have found themselves ineligible for debt forgiveness due to burdensome eligibility criteria and other problematic hurdles. More than 98 percent of applicants seeking loan forgiveness have been rejected by the program, oftentimes due to paperwork errors. The ED announcement details significant changes aimed at closing this gap, including:

• A limited waiver retroactively applying PSLF loan forgiveness to all federally backed loans, not just those owned by ED
• Reviewing PSLF application denials for errors
• Giving borrowers the ability to appeal their PSLF determinations
• Automatically providing credit toward PSLF for military service members and federal employees through data matching
• Allowing military service members to credit months spent on active duty toward PSLF regardless of deferment or forbearance status

ED estimates that over 550,000 borrowers will benefit from the waiver program alone, receiving on average roughly two additional years of progress towards loan forgiveness. The department expects other changes to benefit borrowers who are newly consolidating under PSLF or newly applying for the program. Additionally, ED is exploring other helpful steps, such as partnerships with employers, to continue to make the PSLF process easier for borrowers.

NACo applauds these changes, which could benefit the more than 3.6 million Americans employed by county governments. Not only do counties recognize the importance of federally-backed student loan programs in preserving equal educational opportunity, but our workforce recruitment and retention will also significantly benefit from a PSLF that meets its promise of rewarding and incentivizing public service.

NACo will continue to monitor administrative and legislative action related to the PSLF.

Additional Resources

• NACo Report: Planning for the Future of Work Amid a Global Pandemic
• NACo Report: Counties Support Post-Secondary Education and Workforce Opportunities for Residents