October 6, 2022


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33,000 Borrowers to Get $2 Billion in Relief

  • Education Sec. Miguel Cardona said 33,000 student-loan borrowers will get $2 billion in relief in coming weeks.
  • This is a result of reforms to the Public Service Loan Forgiveness Program announced last month.
  • Per Cardona, 10,000 borrowers have already gotten $715 million in debt wiped out.

On Thursday, Education Secretary Miguel Cardona wrote on Twitter that recent reforms to a federal program meant to provide student-debt relief to public servants, like teachers and nonprofit workers, is working. He said thousands of borrowers are on track, or have already gotten, student-debt relief.

Last month, the Education Department announced a series of reforms to the Public Service Loan Forgiveness (PSLF) program, which is meant to provide relief after ten years of qualifying payments, but has instead racked up a 98% denial rate.

According to Cardona’s tweet, in the coming weeks 30,000 borrowers will receive $2 billion in debt relief, and 10,000 eligible borrowers have already gotten $715 million in debt wiped out. In October, the department said it would implement a limited-time waiver through October 31, 2022, that will allow borrowers to count payments from any federal-loan programs or repayment plans toward loan forgiveness through PSLF, including programs and plans that were not previously eligible.

That waiver alone would bring 550,000 student-loan borrowers closer to relief automatically, the department said. Other changes included allowing months spent on active duty for service members to count toward payments, even if the loans were on deferment or forbearance, along with plans for the department to review all denied PSLF applications to identify and address errors. Borrowers who believe there was a mistake in processing their applications can also receive another review next year.

PSLF was created in 2007, and since the first group of borrowers became eligible for forgiveness in 2017, the program ran up a 98% denial rate, pushing many public service off track for loan relief they thought they receive. While the reforms are good news for those borrowers, though, many have reported confusion with the new rules.

A spokesperson for the Pennsylvania Higher Education Assistance Agency (PHEAA), which manages PSLF, referred Insider to a letter from Federal Student Aid head Richard Cordray addressing confusion that borrowers are facing, saying that “complex changes of this magnitude are hard to process and execute.”

“But we will get the changes made, and I pledge that to you today,” Cordray said. “We ask for your patience as we move forward.”

In July, PHEAA announced plans to shut down its federal loan services in December, but given administrative difficulties with transitioning 8.5 million borrowers, including PSLF accounts, to a new company before the payment pause lifts on February 1, it said on Wednesday it will be extending its contract one extra year.

Aside from PSLF, the department has canceled about $11.5 billion in student debt for targeted groups of borrowers, like those defrauded by for-profit schools, but it still will not comment on broad student-loan forgiveness. Insider reported earlier this month that the department has been sitting on the memo that says whether President Joe Biden can cancel student debt broadly since at least April, and it will not release the findings of the memo and continues to say the administration is examining the issue.