Public servants must be enrolled in specific repayment plans, primarily those that cap monthly loan payments to a percentage of their income. However, some borrowers say the loan servicing company that collects their payments led them to believe they were in the appropriate plan when they were not. Many of those borrowers can now apply to have their ineligible payments counted toward loan forgiveness. But there a few hoops to jump through.
To qualify, a borrower’s most recent monthly payment and the one made a year before applying for forgiveness must be as much as they would have paid in a correct plan. Public servants must have had their loan forgiveness application rejected because some or all payments were not made under the appropriate plan. They must have at least 10 years of full-time employment certified by a qualifying employer and approved by FedLoan Servicing, the company overseeing the loan forgiveness program.
The Education Department will reconsider eligibility using an expanded list of repayment plans: graduated repayment, extended repayment, consolidated standard repayment and consolidated graduated repayment. None of those plans would typically qualify under the loan forgiveness program. Borrowers must have made 120 payments under those plans while working full-time in the public sector.
Lawmakers created a $350 million fund to cover the cost of canceling more loans, but once the money runs out, so will the offer. Forgiveness under this temporary program is being offered on a first-come, first-served basis. People who meet the criteria must email FedLoan at TEPSLF@myfedloan.org to request their case be reconsidered. The servicing company will contact applicants if more documentation of their income is needed.
The temporary expansion is rooted in legislation introduced by Sens. Sheldon Whitehouse (D-R.I.) and Tim Kaine (D-Va.) in November that would have provided relief to all borrowers who qualified. Reps. Brendan Boyle (D-Pa.), Ryan Costello (R-Pa.), John Sarbanes (D-Md.) and Brian Fitzpatrick (R-Pa.) sponsored the companion bill in the House. The bills stalled in committee, but the measure was revived during budget negotiations in March.
The lawmakers said they were moved by stories from teachers, nurses and military service members in their districts who complained of receiving inconsistent and unclear guidance from FedLoans. A report issued by the Consumer Financial Protection Bureau in June concluded that botched paperwork, flawed payment processing and inaccurate information from the loan servicer had prevented hundreds of public-sector workers from receiving loan forgiveness.
Public Service Loan Forgiveness has been a lightning rod for criticism over the years. It has been derided as a backdoor subsidy for graduate school and a handout for doctors and lawyers who have the earning potential to repay their student loans. The Trump administration has proposed eliminating it, as have House Republicans in their higher education bill.
Proponents of the program, introduced in 2007 by the administration of President George W. Bush, say it is still lives up to its mission of encouraging college graduates to pursue careers as teachers, public defenders or rural doctors — public service fields that traditionally pay relatively low wages.