The Education Department rolled out a series of major changes to the troubled Public Service Loan Forgiveness (PSLF) program for student loan borrowers in public service in October, and the level of debt cancellation is topping even the government’s estimates.
According to a tweet by Education Secretary Miguel Cardona on Thursday, roughly 10,000 borrowers who were on PSLF have already had $715 million erased because of the change in policy and another 20,000 will be notified in the “coming weeks.” Altogether, according to Cardona, 30,000 borrowers will see roughly $2 billion forgiven.
An ED spokesperson confirmed the debt cancellation totals with Yahoo Finance.
“This is fantastic news for those who will have their debts cancelled and demonstrates how the Biden administration has the power to make life better for all people with student debt,” Mike Pierce, executive director at the Student Borrower Protection Center, told Yahoo Finance. “With payments currently set to restart in less than 90 days, there is much more work to be done for our public servants and all Americans with student loan debt.”
The PSLF program, created by Congress in 2007, enables government and non-profit employees — including teachers, firefighters, nurses, first responders, service members, and other public service workers — with federally-backed student loans to apply for forgiveness after proof of 120 monthly payments under a qualifying repayment plan.
ED’s policy change in October was previously expected to result in 22,000 student loan borrowers with consolidated loans — which were previously ineligible to be counted towards loan forgiveness — becoming “immediately eligible” for $1.74 billion in forgiveness.
“The temporary waivers announced by the Department of Education have been an actual life changing event for many of the borrowers we work with,” Betsy Mayotte, president of The Institute of Student Loan Advisors, told Yahoo Finance.
Mayotte said she had received dozens of notes from borrowers who, after battling for loan forgiveness for many years — and even decades — “who woke up this week to find that their balance is finally zero.”
‘I feel like I can finally breathe and enjoy my life‘
The debt cancellation is a meaningful turnaround for the notoriously troubled PSLF program.
According to the National Education Association, 45% of educators took out student loans averaging $55,800 to attend college. Out of this group, 14% with unpaid student loan debt have a current balance of $105,000 or more. And educators of color and younger educators have been particularly impacted.
An 2020 investigation by the Student Borrower Protection Center (SBPC) last year also found that members of the military are facing several obstacles when it comes to getting student loan forgiveness.
Using public records filed in 2018, the group found last year that while 200,000 service members hold $3 billion in student loan debt, only 17,534 had submitted the right paperwork. And within that group, only around 40% were actually on track for debt relief.
“As the burden of student loan debt has impacted ever larger swathes of American society, the U.S. military has seen more service members come onto active duty with student loans,” Mike Saunders, former director of military and consumer protection at Veterans Education Success, told Yahoo Finance. “This means that PSLF has become a huge factor when it comes to getting the all-volunteer force to reenlist past their initial service obligation.”
Saunders, who co-authored the SBPC investigation, added that as long as “kinks in the system get smoothed out soon, the administration’s recent moves to ensure more of the force is eligible for PSLF will go a long way towards recruiting and retention.”
Borrowers are celebrating their loan forgiveness notifications by posting on a Reddit thread, with many seeing as much as $100,000 in debt or more being wiped out.
“Yes, this is real!” one borrower posted on Reddit. “I can’t believe that $201,000 has been lifted off my shoulders. I feel like I can finally breathe and enjoy my life. Please go out and do something positive for a less fortunate person. Give back in some way-be a blessing!”
Aarthi is a reporter for Yahoo Finance. She can be reached at email@example.com. Follow her on Twitter @aarthiswami.
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