Student loans will be canceled for a further 78,000 public sector workers

WASHINGTON (AP) — Another 78,000 Americans will have their federal student loans canceled under a program to assist teachers, nurses, firefighters and other public officials, the Biden administration announced Thursday.

The Department of Education is canceling borrowers’ loans because they’ve reached the 10-year repayment period while working in public service, making them eligible for relief under the Public Service Loan Forgiveness program.

“These public workers have dedicated their careers to serving their communities, but because of past administrative failures, they have never received the relief they were entitled to under the law,” President Joe Biden said in a statement.

Congress created this system in 2007, but rigid rules and mistakes made by student loan servicers left many borrowers unable to get the promised cancellation. The Biden administration loosened some rules and retroactively granted many borrowers a 10-year repayment loan.

As a results of these actions, the Biden administration canceled the loans of greater than 871,000 public sector workers. Earlier, about 7,000 borrowers had their loans canceled.

The latest round of pardons will cancel about $5.8 billion in federal student loans.

Starting next week, individuals who receive forgiveness will receive an email from Biden congratulating them on their relief. A message from the Democratic president, who’s running for re-election, will also be sent to 380,000 borrowers who’re two years faraway from pardon under this system.

“I hope you will continue the important work of serving your community,” the message says, “and if you do, you can have your remaining student loans forgiven in less than two years through the Public Service Loan Forgiveness program.”

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The program was created to encourage Americans to work in public service, including teachers, firefighters, nurses, government workers and other people working for nonprofit groups. After 10 years of monthly loan repayments, this system promised to wipe out the rest.

But when the primary wave of workers crossed the 10-year mark, the overwhelming majority were rejected. Many people didn’t realize that their loans didn’t qualify under this system’s rules, and plenty of were improperly induced into forbearance by loan servicers, temporarily pausing payments and progress toward cancellation.

In 2021, the Biden administration offered a one-time solution that retroactively granted borrowers back payments even in the event that they were in forbearance or had an ineligible loan. Later, some rules were permanently relaxed. For example, payments made greater than 15 days after the due date weren’t previously counted towards the 10-year period, but the brand new rules include late payments or payments made in installments.

“Today, more than 100 times more borrowers are eligible for PSLF than at the beginning of the administration,” Education Secretary Miguel Cardona said Thursday.

The Biden administration says it has now canceled nearly $144 billion in federal student loans under the Public Service and other programs, including a program for borrowers misled by colleges.

Biden is individually calling for broader loan cancellations, including: for borrowers who’ve been repaying for a long time and those that attended universities deemed to have low graduate value.

The Department of Education is pursuing the plan through a federal rulemaking process after the U.S. Supreme Court blocked Biden’s previous try and universally cancel performances.