Student Loan Forgiveness: New Proposal Aims To Make It Easier To Qualify Bankrate Caret RightMain Menu Mortgage Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Bank Banking Compare Accounts Use calculators Get advice Bank reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Credit Card Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Caret RightMain Menu Loan Loans Personal Loans Student Loans Auto Loans Loan calculators Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Invest Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Home Equity Home equity Get the best rates Lender reviews Use calculators Knowledge base Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Loan Home Improvement Real estate Selling a home Buying a home Finding the right agent Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Insurance Insurance Car insurance Homeowners insurance Other insurance Company reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Retirement Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Advertiser Disclosure
Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: Bloomberg/Contributor/Getty Images May 11, 2021 Checkmark Bankrate logo How is this page expert verified? At Bankrate, we take the accuracy of our content seriously. "Expert verified" means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced. Their reviews hold us accountable for publishing high-quality and trustworthy content. Hanneh Bareham specializes in everything related to student loans and helping you finance your next educational endeavor. She aims to help others reach their collegiate and financial goals through making student loans easier to understand. Mark Kantrowitz is an expert on student financial aid, the FAFSA, scholarships, 529 plans, education tax benefits and student loans. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our loans reporters and editors focus on the points consumers care about most — the different types of lending options, the best rates, the best lenders, how to pay off debt and more — so you can feel confident when investing your money. Bankrate logo Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Democrats in early May signed a letter outlining proposals that would reform Public Service Loan Forgiveness (PSLF). is a relief program that forgives federal student loan debt for borrowers working in a qualified public service job for a required amount of time. Once the borrower makes 120 qualifying on-time payments, the remaining loan balance is discharged. Dozens of U.S. Congress members and senators urging Secretary of Education Miguel Cardona to direct the department to reform PSLF. Led by Democratic Sens. Tim Kaine, Kirsten Gillibrand and Rep. John P. Sarbanes, the letter calls for four major reforms to PSLF and eligibility requirements: Make all federal student loans eligible. Make all repayment plans eligible. Waive restrictions at time of forgiveness. Automatically qualify borrowers. The letter says that because of previous implementation failures, many qualifying borrowers have not been able to access forgiveness through the program, failing America’s frontline workers and those working in the public service sector during the COVID-19 crisis. This proposal calls for radical change to a program that’s been under over the past couple of years. If implemented, millions of borrowers would be able to qualify and get relief through PSLF. This is the from lawmakers in Washington. 4 proposed changes to Public Service Loan Forgiveness
Here are the proposed changes to the program and what they could mean for the future of PSLF. 1 Make all federal student loans eligible
As of right now, all federal student loans are eligible for PSLF. However, those that do not hold Direct Loans have extra hoops to jump through before they become eligible. Those who have Federal Family Education Loans (FFEL) must convert their loans into a Federal Direct Consolidation Loan in order to meet the requirements. Many have missed out on the possibility of forgiveness because of not consolidating their loans at the beginning of their career, which is the most effective time to do so, the letter states. To make this an easier and more efficient process, Democrats are proposing that all federal student loans — including FFEL — be eligible automatically without consolidation. 2 Make all repayment plans eligible
Only those enrolled in (IDR) plans or standard repayment can qualify for PSLF. Income-driven repayment plans are a federal repayment option that bases your monthly payment on income and family size. A major flaw in eligibility for PSLF revolves around the . “At least 1.4 million borrowers are unknowingly enrolled in ineligible repayment plans after previously taking steps to get back on track for PSLF,” the proposal reads. Congress rolled out the Temporary Expanded Public Service Loan Forgiveness Program (TEPSLF) in 2018 in an attempt to fix this. TEPSLF allowed borrowers to have made payments under graduated or extended repayment plans, provided that the last 12 months of payments were at least as much as the payments under an income-driven repayment plan. However, it’s proposed that all repayment plans be eligible for PSLF, not just IDR. 3 Waive restrictions at time of forgiveness
Only those working a qualifying public service job for at least 10 years are able to receive forgiveness. To receive full forgiveness with PSLF, borrowers must still be working within the public sector at the time of forgiveness. The proposal claims that many individuals that would otherwise qualify stop submitting the required documentation because they believe they are no longer eligible. It also claims that because of COVID-19, many jobs in this field are no longer available, and many employees have become furloughed or have lost their jobs altogether, making them ineligible. The lawmakers are calling on the U.S. Department of Education to amend this rule by allowing borrowers that completed their 10 years of eligible payments to receive full forgiveness under PSLF, regardless of their occupation at the time of forgiveness. 4 Automatically qualify borrowers
Highlighting one of the major complications with the program, those enrolling for PSLF must submit information about their employer to the Department of Education. In an effort to streamline the application process, the proposal calls for that responsibility to fall on the Department of Education rather than each individual borrower. “There are millions of employees for whom the Department could easily determine qualification for PSLF.” How would this data be safely collected? The proposal lays out a potential solution: “The Department should establish secure data-sharing agreements with the Department of Defense and Office of Personnel Management to automatically identify public service workers who have outstanding federally held student debt.” Will this PSLF reform proposal be approved
Nothing can be determined yet on the likelihood of these proposals becoming legislation. However, President Joe Biden has historically been in favor of revising pre-existing forgiveness programs. He has already guided the Department of Education to revise the repayment program and the (TPD) discharge program. While the president is his constitutional ability to cancel student loan debt, amendments to PSLF — at this time — could be more likely to pass than . The letter cites the same waiver authority from the Heroes Act of 2003 that was used to implement the payment pause and interest waiver. However, this waiver authority is limited to ensuring that recipients of federal student aid are “not placed in a worse position financially in relation to that financial assistance because of their status as affected individuals.” The first and second proposals do not satisfy that requirement. The third proposal does satisfy this requirement. The fourth proposal does not require waiver authority for the U.S. Department of Education to implement it. Learn more
SHARE: Hanneh Bareham specializes in everything related to student loans and helping you finance your next educational endeavor. She aims to help others reach their collegiate and financial goals through making student loans easier to understand. Mark Kantrowitz is an expert on student financial aid, the FAFSA, scholarships, 529 plans, education tax benefits and student loans. Related Articles