Student-Loan Forgiveness to Include More Public-Sector Workers

The Biden administration is expected to overhaul a student-loan forgiveness program that would make it easier for more public-sector workers to qualify for debt relief.

The planned changes to the Public Service Loan Forgiveness program will help roughly 550,000 borrowers of the 1.3 million enrolled in the program get closer to loan forgiveness, the Education Department said.

The department plans to announce the changes Wednesday, the latest move by the Biden administration to ease student-loan debt for select groups of borrowers.

Congress created the PSLF program in 2007 to encourage people to work in government or for some nonprofits.

To qualify for loan forgiveness, a borrower must work in a public-sector job and have made 120 on-time payments toward repaying the debt. But the program is only available to borrowers who have a specific type of student loan, known as Direct Loans, from the federal government. The requirement has caused confusion among borrowers unsure whether their loans qualify for loan forgiveness.

The department has previously allowed borrowers to consolidate their debt into Direct Loans but didn’t count repayments made before the consolidation.

The changes set to be announced Wednesday will temporarily allow all payments regardless of loan type to count toward the PSLF program, if borrowers consolidate their student debt by Oct. 31, 2022. Borrowers with formerly ineligible loans will also have their payments counted, if they apply for the program by that date, the Education Department said.

Members of the military will be able to count deferments and forbearances while on active duty toward the loan forgiveness.

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Since the program was created, only 5,500 borrowers have seen their debt wiped clean under the program, according to a June Education Department publication, which said that the program’s rules have “spawned much confusion and frustration.”

Education Secretary

Miguel Cardona

said, “Borrowers who devote a decade of their lives to public service should be able to rely on the promise of Public Service Loan Forgiveness.” He added, “The system has not delivered on that promise to date but that is about to change.”

In a statement Wednesday, the National Education Association, the country’s largest teachers union, called the change “a welcome step towards keeping the promise of PSLF and canceling the student debt of every educator who has served their commitment to their communities.”

The union said more than 48,000 of its members had sent letters and comments to Education Department officials calling for the changes to the loan program.

The Education Department will contact borrowers directly to encourage them to consolidate their loans or apply for the program by next year to help as many people as possible, a department official said Tuesday.

The department has already announced plans to discharge more than $5.8 billion in loans taken out by 323,000 borrowers who are disabled. It also canceled student debt owed by thousands of former students of the defunct ITT Technical Institute, which federal regulators say practiced deceptive recruiting practices.

The Education Department has said it is planning further moves to help former students of other for-profit schools have their debt forgiven.

Write to David Harrison at david.harrison@wsj.com

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