The latest proposed rules would allow more payments to qualify for PSLF including partial, lump sum, and late payments. Image: zimmytws/Shutterstock.com
By: FEDweek StaffThe Education Department has announced further changes to the Public Service Loan Forgiveness program, which has proven to be used less than expected due to what the announcement called “narrow rules and a needlessly complicated system.”
The program aims to incentivize people to enter public service by providing loan forgiveness after making 120 qualifying monthly payments under a qualifying repayment plan while working full-time for government at the federal, state, local, or tribal level. It is separate from one in which agencies may reimburse employees up to $10,000 a year with a $60,000 lifetime maximum for student loan costs as a recruitment and retention incentive.
Last fall the department had announced steps including simplifying the application process; a waiver period through next October so that student borrowers can count payments from all federal loan programs or repayment plans toward forgiveness, including loan types and payment plans that were not previously eligible; correcting errors that may have led to denials; and new efforts to inform potentially eligible people of the program and encourage them to apply.
The latest proposed rules would allow more payments to qualify for PSLF including partial, lump sum, and late payments; allow certain kinds of deferments and forbearances (such as those for Peace Corps and AmeriCorps service, National Guard duty, and military service) to count toward PSLF; and create a reconsideration process for borrowers whose applications are denied, among other changes.
Those were part of a larger package of changes to student loan programs in general which would: “alleviate student loan debt burdens for borrowers whose schools closed or lied to them” or who are totally and permanently disabled; generally bar the practice of adding unpaid interest to a borrower’s principal balance; and provide borrowers access to court if they have disputes with their colleges.
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