Here are 17 ways to fix student loan forgiveness.
Here’s what you need to know.
Student loan cancellation is a hot topic, even if there’s been no wide-scale student loan forgiveness. President Joe Biden is focused on revamping student loan forgiveness and student loan repayment so that more student loan borrowers can get financial relief. Through hearings and public comments, the U.S. Department of Education is asking student loan borrowers and the general public to share constructive feedback about student loan forgiveness, particularly the Public Service Loan Forgiveness program. Once collected, Congress and the Biden administration can work jointly to improve student loan forgiveness. Many of the stories are harrowing, with student loan borrowers who have worked in public service or at a non-profit for 10 years, but still haven’t received student loan cancellation and are drowning in student loan debt. Here are 17 recommendations to fix student loan forgiveness, as shared through public comments from student loan borrowers who have been impacted most by the Public Service Loan Forgiveness program:
1. Student loan forgiveness after 10 years — no excuses
Recommendation: work for 10 years for a qualifying public service or non-profit employer, and you’re done.
Commentary: Currently, to get public service loan forgiveness, student loan borrowers must complete 120 monthly student loan payments on-time and in full. Often, 120 monthly payments means 10 years of work for a qualifying non-profit or public service employer. In some cases, however, 120 student loan payments may take longer than 10 years. Under this recommendation, student loan borrowers would automatically get student loan forgiveness after 10 years of service. Public service loan forgiveness has a 98% rejection rate, and a new report predicts 80% of student loan borrowers should expect to get rejected for student loan forgiveness over the next five years.
2. Don’t keep working while student loan forgiveness is certified
Recommendation: Stop working after 120 student loan payments are made.
Commentary: Under this proposal, student loan borrowers would get automatic student loan forgiveness after making 120 monthly student loan payments. Unlike current guidelines, a student loan borrower should not be required to continue working in public service once the 10-year requirement is met and documentation is provided. Under current guidelines, a student loan borrower must keep working for their current employer until a final determination is made. (Here’s where Democrats stand on student loan forgiveness).
3. Get student loan forgiveness after 5 years
Recommendation: Give student loan forgiveness to student loan borrowers after 5 years.
Commentary: This proposal would reduce the requirement to get student loan forgiveness from 120 monthly payments to 60 monthly payments, or 5 years. This would help more student loan borrowers get student loan cancellation sooner.
4. Student loan cancellation should be easier for Parent PLUS Loans
Recommendation: Make Parent PLUS Loans eligible for other income-driven repayment plans.
Commentary: For public servants with Parent PLUS Loans, there are limited options for income-driven repayment plans. Only Income-Contingent Repayment (ICR) is an eligible income-driven repayment plan for public service loan forgiveness. This proposal would expand options for borrowers with Parent PLUS Loans to include, for example, Income-Based Repayment (IBR), Pay As You Earn (PAYE) and Revised Pay As You Earn (REPAYE).
5. Your income-driven repayment plan shouldn’t matter
Recommendation: If you make 120 student loan payments and work for a qualified employer, your income-driven repayment plan shouldn’t matter.
Commentary: Make student loan forgiveness more accessible to student loan borrowers. Your choice of income-driven repayment plan shouldn’t matter. This is a call to simplify student loan repayment, particularly with income-driven repayment. (While wide-scale student loan forgiveness hasn’t happened, these four congressmen want student loan cancellation cancelled).
6. Make FFELP Loans eligible for student loan forgiveness
Recommendation: Make FFELP student loans eligible for student loan forgiveness.
Commentary: Currently, FFELP student loans aren’t eligible for public service loan forgiveness because they aren’t Direct Loans issued by the federal government. To qualify, student loan borrowers first must consolidate their FFELP Loans into a Direct Consolidation Loan, and then make 120 student loan payments. The problem is that many student loan borrowers don’t realize they need to consolidate their student loans first, so they make student loan payments on their FFELP Loans. However, these payments don’t count toward public service loan forgiveness, leaving these student loan borrowers devastated. This proposal says that any qualifying student loan payments made toward the 120 monthly payments should count, whether they are Direct Loans or FFELP Loans so long as the student loan borrower consolidates their FFELP Loans any time before reaching 120 monthly payments. Give credit to student loan borrowers for the period they worked in public service, but had FFELP Loans. So long as they consolidate FFELP Loans into a Direct Consolidation Loan, they shouldn’t lose the time period before the consolidation for purposes of student loan forgiveness.
7. Student loan forgiveness information should be more accessible
Recommendation: Make information on student loan forgiveness more accessible.
Commentary: Create a way for student loan borrowers to know what student loan forgiveness and student loan repayment options are available to them besides posting it on the U.S. Department of Education website. This could happen through email, for example, but of course student loan borrowers would need to update their contact information as it changes. Transparency and education are essential when it comes to student loan repayment. Ensure that student loan borrowers are clearly informed of all their repayment options.
8. Student loan cancellation: Make the Employer Certification Form easier
Recommendation: Make the Employer Certification Form easier to complete.
Commentary: The U.S. Department of Education should make the process to certify your employment with a qualified public service or non-profit employer seamless. Provide more information to student loan borrowers on how to complete the Employment Certification Form.
9. Cap the percentage rate of discretionary income for monthly student loan payments
Recommendation: Limit the percentage of discretionary income that you must pay for your student loans.
Commentary: To qualify for public service loan forgiveness, you must make a majority of your student loan payments while enrolled in an income-driven repayment plan. Each plan requires that you pay 10-20% of your monthly discretionary income toward your federal student loans. This proposal would cap the percentage to 5%, for example, as Biden as proposed. Make sure to recertify your income with your student loan servicer at least every year and when your employment changes. It’s possible to pay as low as $0 per month on an income-driven repayment plan based on your income, family size and state of residence.
10. Student loan forgiveness can’t happen if student loan servicers keep losing paperwork
Recommendation: Make sure all student loan payments are properly counted by student loan servicers.
Commentary: One student loan borrower wrote that their student loans kept getting sold and “paperwork” had been lost in the “transfer process,” which resulted in past student loan payments not counting toward public service loan forgiveness. There should be a clear way for student loan borrowers to have these issued addressed, so that student loan payments are counted properly. This can be accomplished principally through either the U.S. Department of Education, Consumer Financial Protection Bureau (CFPB) or an alternative mechanism. These are only some of the complaints against student loan servicers, while other student loan borrowers allegedly faced $40 million of wage garnishments to pay student loans even after Congress halted all garnishments due to the Covid-19 pandemic.
11. Make student loan forgiveness available each year for 10 years
Recommendation: Forgive 10% of federal student loans for every year worked in public service, up to 10 years.
Commentary: This enables student loan borrowers to get student loan forgiveness annually, rather than waiting a full 10 years to get their federal student loans cancelled.
12. Hold student loan servicers accountable for student loan cancellation
Recommendation: Hold student loan servicers accountable if they provide student loan borrowers with materially false or misleading information regarding student loan forgiveness.
Commentary: Student loan borrowers rely on student loan servicers to deliver them accurate information, including for student loan cancellation. It’s imperative that student loan servicers are properly trained and informed so they can provide a fully accurate overview to student loan borrowers regarding their options for student loan forgiveness and student loan repayment.
13. Give partial student loan forgiveness.
Recommendation: Consider partial student loan forgiveness of $10,000 a year for student loan borrowers who are pursuing public service loan forgiveness.
Commentary: Provide $10,000 of student loan forgiveness for every year of service. With annual student loan forgiveness, student loan borrowers could realize tangible results every year. They would also be made aware of any potential mistakes in their application or loan qualification, which would help them make appropriate changes now, rather than waiting 10 years. This also could provide more job mobility if a student loan borrower recognizes more frequent student loan forgiveness and may opt for an alternative job after several years of student loan forgiveness.
14. Cancel student loan debt
Recommendation: Cancel student loans.
Commentary: Multiple student loan borrowers called on Biden to cancel student loans. Student loan borrowers proposed total student loan cancellation, $50,000 student loan cancellation or an alternative amount. Rather than fix public service loan forgiveness, these student loan borrowers want Biden to cancel student loans. This would help provide relief to student loan borrowers pursuing a career in public service. Here are 5 reasons why Biden hasn’t cancelled student loans. That said, since becoming president, Biden has cancelled nearly $10 billion of student loans on a targeted basis. Find out if you qualify for this Biden student loan forgiveness. Also, Biden’s student loan forgiveness means three things for your student loans.
15. Make employers manage employment certification for student loan forgiveness
Recommendation: Employers, not student loan borrowers, should manage employer certification and reporting.
Commentary: It’s burdensome for the student loan borrower to have certify employment each year. Shift the reporting requirement to non-profit and public service employers, rather than student loan borrowers.
16. Make student loan cancellation more transparent
Recommendation: Require student loan servicers to create dashboards for public service loan forgiveness.
Commentary: This would allow student loan borrowers to track the progress of their student loan payments, confirm eligibility, and monitor their document submissions. Transparency in student loan cancellation is critical, and these heroes have helped implement more student loan cancellation for more borrowers.
17. Be flexible for student loan borrowers who get a graduate degree
Recommendation: Make pausing student loan payments easier for student loan borrowers who get a graduate degree.
Commentary: Student loan borrowers who pursue a graduate degree while pursuing public service loan forgiveness say the process is headache-inducing. Ensure that student loan borrowers can easily pause student loan payments while enrolled in graduate school. All prior qualifying student loan payments prior to graduate school should count toward the required 120 student loan payments.
While these are only proposals, it’s clear that student loan borrowers are looking for change to public service loan forgiveness. Expect the Education Department, led by Secretary Miguel Cardona, to implement concrete changes to your student loans. With student loan relief expiring soon, it’s imperative that all student loan borrowers fully understand all options for student loan payments. Here are some popular options to save money:
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Student loan cancellation became focus today on Capitol Hill