3 ways Biden could fix student-loan forgiveness for public servants 'locked in a lifetime of debt,' over 200 organizations say

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Joe Biden
President Joe Biden. AP Photo/Evan Vucci
  • The Public Service Loan Forgiveness program rejects 98% of public servants who apply for debt relief.

  • 200 groups urged Biden to forgive student debt for those who've worked over a decade in public service.

  • Biden has yet to implement reforms to the program - something he promised to do in his campaign.

  • See more stories on Insider's business page.

The Public Service Loan Forgiveness (PSLF) program was created to give public servants, like teachers and government and nonprofit workers, student-debt relief after ten years on the job. But 98% of those public servants continue to be denied relief, prompting advocates to call on President Joe Biden to implement urgent reform.

More than 200 advocacy organizations, led by the Student Borrower Protection Center, sent a letter to Education Secretary Miguel Cardona on Wednesday detailing how PSLF has failed to live up to its promise of instituting student-debt relief.

They wrote that when Congress created PSLF in 2007, the program was built on ensuring public servants would not be "locked in a lifetime of debt," but the opposite has happened, and flaws in the program have denied the vast majority of borrowers the relief they are entitled to.

The letter said that "workers across the country have faced widespread, systemic barriers to PSLF while responding to an unprecedented public health emergency, navigating a deep economic recession, and struggling to emerge from an unequal economic recovery. Throughout the pandemic, public service workers have remained on the hook for debts they should not owe, taking a heavy psychological and financial toll month after month."

To remedy the "systemic failure" of the program, the organizations called on Cardona to follow through on three reforms:

  1. Eliminate all student debt for those who have worked in public service for more than ten years;

  2. Change the criteria for eligibility to focus solely on the duration of public service performed by granting credit for each year of public service;

  3. Automate the process for student-debt relief instead of requiring borrowers to submit paperwork.

During his campaign, Biden promised to reform PSLF, and the Education Department is currently in the rulemaking process the organizations referenced, which includes a years-long process of receiving public comments on reforms and debating them in committees. The organizations urged Cardona in the letter to implement the reform outside the rulemaking process by whatever authority he has under the law to carry out this relief and deliver on the program's promise.

As Insider has previously reported, the program has been flawed for years and is hurting public servants who are eligible for relief. The Student Borrower Protection Center released data on Tuesday that found over 4,500 teachers were denied loan forgiveness under PSLF because of minor paperwork errors they made, like failing to write the date next to their signature, while others were denied because their school did not qualify as a public service employer.

And Insider reported earlier this month that if the program continues on its current track, it may see minor improvements, but still only approve 20% of borrowers for forgiveness by 2026.

Even those who managed to get relief through PSLF had to face bureaucratic hurdles. Insider spoke to David O'Keefe, a public servant who succeeded in getting his remaining $20,000 student debt balanced wiped out through the program, but he was mistakenly told he wasn't eligible and had to conduct follow-up after follow-up to ensure his paperwork was being processed accurately.

"It was the same thing again and again," O'Keefe said. "It was extremely frustrating."

Read the original article on Business Insider

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