Finally, some truly good news for student loan borrowers working in the public interest

One of our biggest frustrations as financial planners has been the abject failure of the Public Service Loan Forgiveness (PLSF) program, which was a promise the federal government made to my generation: Work for 10 years in the public interest and give back to society and after that period, the government will forgive your federal student loans. Over and over, we have seen the impact of this failure of the government to live up to to their promise, and have watched the stress that the 98% rejection rate of the program has put on our clients, who feel lied to. They have put in their time, given back to society and sacrificed pay and for-profit opportunities to continue their mission-driven work, relying on the promise of relief from the crushing burden of their student loans. Most of these clients found themselves in the same place as almost half of all borrowers – making regular payments on their loans on time, struggling to find the room in their budgets to balance their savings goals with paying down debt, only to watch the balances on those loans continue to rise. 

Today is a day for celebration, as the Department of Education has finally acknowledged that this program is broken, and in response has implemented a limited PSLF Waiver, which will count all prior payments made by borrowers towards the forgiveness granted under the program regardless of the loan type or repayment plan the borrower has been in.

It’s hard to overstate the impact of this change, but the Department of Education estimates that this change will help over 550,000 borrowers, including 22,000 borrowers who they estimate will be immediately eligible for loan forgiveness. The loan numbers are staggering, amounting to over $2.82 BILLION in forgiveness. The announcement (which you should read for yourself in its’ entirety) reads like our wish list for how to fix the program, and includes the following steps, which we hope will dramatically improve the process.

The Department of Education will:

  • Implement a Limited PSLF Waiver to count all prior payments made by student borrowers toward PSLF, regardless of loan program
  • Simplify what it means for a payment to qualify for PSLF
  • Eliminate barriers for military service members to receive PSLF
  • Automatically help service members and other federal employees access PSLF.
  • Review Denied PSLF Applications and Identify and Correct Errors in PSLF Processing
  • Improve Outreach and Communication with PSLF-Eligible Borrowers.
  • Simplify the PSLF Application Process.
  • Make Long-Term Improvements to PSLF through Rulemaking

These changes are, in our opinion, long overdue, as the Consumer Financial Protection Bureau has repeatedly acknowledged the deep failings of the program.

Here are some resources to help you find additional information:

You may or may not need to take action to take advantage of this opportunity. Your individual situation and payment history on your loans will determine this. This program is time sensitive, and you may need to take action (again, depending on your individual situation) before the program expires on 10/31/2022. Here’s how long you have left:

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We’re here to help if you’d like to get in touch – here’s our scheduler if you’d like to hop on zoom or a phone call to discuss how this new program impacts you. These conversations are included in the fees our existing clients pay us, and for those who simply want our advice and want to know what it costs, we have a sliding fee scale based on your ability to pay for this type of consultation. View the fee schedule here.