Biden needs to fix the Public Service Loan Forgiveness Program

Since taking office, the Biden administration has set to work fixing some of the issues that student borrowers have faced. The administration recently canceled $10 billion in student debt for borrowers, including $2.6 billion for borrowers defrauded by for-profit schools and $1.3 billion for some borrowers with disabilities. The administration has also retroactively canceled the interest on student loan payments for service members, without forcing them to jump through hoops of red tape to secure that benefit. These have been much-needed, meaningful fixes for the borrowers affected by these issues. However, there are millions more who haven’t been granted relief still struggling to pay their student loans.

Another necessary and urgent fix that the Biden administration must address is overhauling the Public Service Loan Forgiveness (PSLF) Program. PSLF was established so that people working in public service could have their loans forgiven after 10 years of service to their community and our country. But the program has severely malfunctioned, with millions of people — 98 percent of applicants — denied the relief they were promised.

Horror stories abound from teachers, nurses, nonprofit workers and government employees who have planned their lives around this promised relief, then were denied loan forgiveness. Many were not informed by their loan servicers that they needed to take certain steps at the outset of their time in the program, causing years of payments not to count toward loan forgiveness. Millions more were illegally knocked off track by their student loan company or misled by the Department of Education. The Public Service Loan Forgiveness Program was created to help working families. And fixing it is a working-class issue. 

The people entering into fields such as government service, public school systems, nonprofit hospitals and other organizations did not do so because they thought it would be lucrative. According to estimates by the Department of Education, almost two-thirds of borrowers pursuing Public Service Loan Forgiveness earn less than $50,000 per year, and 86 percent earn less than $75,000 per year. These workers likely entered these fields because they care about their communities, and the promise of loan forgiveness for their service made those careers more financially viable. PSLF’s devastating track record has failed the working class. To address this, the largest labor unions, representing more than 10 million workers, joined together and demanded that the Biden administration fix the PSLF program and deliver on its promise to working families earlier this year. 

The time to do this is now. Millions of people across the United States will face eviction when the eviction moratorium ends. Thousands have had to flee their homes due to some form of climate disaster in the past year. Job growth stagnated this past month, with the Department of Labor reporting that the United States only added a measly 235,000 jobs in the month of August. And, just in time for this past Labor Day, nearly 11 million people lost some or all of their unemployment benefits in the middle of a pandemic, forcing them back into a deadly low-wage workforce or into abject poverty. Moreover, in the middle of these economic, climate and public health crises, 45 million people will have to once again pay toward their crushing student loan balances in February 2022 when what Education Secretary Cardona deemed the “final” extension on the student loan payment pause ends. 

In recent good news, for the first time ever, the Department of Education is asking those who depend on the program to share their stories to help decide what comes next. Now, before the payment pause ends, is the time to raise borrowers’ voices and sound the alarm about the failures of debt relief for public service workers. So far, the Department of Education has received more than 35,000 public comments. Organizations throughout the county have also heeded the call to push the Education Department to fix PSLF. 

The Biden administration has the chance to fix the broken PSLF system, and the president must do this for the working class. In his Labor Day speech, President Biden clearly stated, “Everyone’s entitled to be treated with dignity,” and it’s past time he extended that dignity to our public service workers struggling to make ends meet. 

Amy Czulada is the Outreach & Advocacy coordinator at the Student Borrower Protection Center. Follow the organization on Twitter at @theSBPC.