CHARLOTTE, N.C. — More people could soon be eligible for help paying their student loans after less than 2% of applicants were approved by the Public Service Loan Forgiveness program.
The program allows certain qualified borrowers to have their debt wiped out if they meet the criteria for their employer and loan type. Congress started the program in 2007 to reward graduates with federally-backed student loans who go into public service, such as by working for the government or an eligible nonprofit organization.
But the program's requirements were notoriously tough, with only 5,500 borrowers getting their loans erased between its inception and October 2021. More than 90% of applicants were rejected, with many making a decade of payments before discovering that they were ineligible due to having the wrong type of loan or repayment plan.
Donna Graves, a neurologist and mother of two, spent almost an extra decade in school. The 43-year-old has been practicing for 11 years and is still paying off her loans.
"My payment is over 30 years," Graves said. "Essentially you're talking about an extra house payment."
Graves never thought about applying for the loan forgiveness program because of how its strict rules.
"It's always been described as very cumbersome to apply for," Graves said. "The success rate is quite poor and very challenging to work through the application process."
Now, millions of people could soon be eligible to have their loans wiped away.
"We're talking about millions of borrowers that could be affected by the expansion," Will Koster, a financial planner who specializes in student loan repayment, said. "We're seeing a lot of changes in the loan world."
There are strict requirements for the public service loan forgiveness expansion:
- To be eligible, you have to work for a qualified employer such as a government institution or a nonprofit. That includes most doctors and teachers.
- You must have been making payments on your loans for at least 10 years.
- One of the big changes: Family federal education, or FFEL loans and Perkins loans, will qualify if they’re consolidated. Previously only direct loans qualified.
There is also now an expansion on the type of repayment plan that qualifies.
"The 30-year graduated or extended repayment plan is now counting toward public service loan forgiveness," Koster said.
That means there's a good chance that Graves, and millions of others saddled with student debt, may get some much-needed help with their loans. Education secretary Miguel Cardona said the program could eliminate an estimated $2 billion in debt.
"I'm hopeful and optimistic," Graves said.
Cardona said the other 20,000 borrowers will be notified about their debt cancellation via email "in the coming weeks."
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