Goodbye to student debt for 60,000 people: Who benefits from Biden's latest round of debt elimination?

One of President Biden’s campaign platforms during the 2020 election was to provide student loan borrowers with relief from insurmountable debt they took on to get a higher education. On Thursday, the Biden-Harris administration announced the approval of another $45 billion in debt forgiveness that will affect 60,000 borrowers.

That will bring the total during the first term of President Biden to over $175 billion in student loan forgiveness which has benefited more than 4.8 million Americans. “This unprecedented milestone builds on the Administration’s efforts to provide relief to as many borrowers as possible across the country,” the US Department of Education said in a press release.

Goodbye to student debt for 60,000 people: Who benefits from Biden’s latest round of debt elimination?

The student debt forgiveness announced this week specifically targets borrowers across the country who work in public service. More than 1 million of these borrowers have received debt relief under Public Service Loan Forgiveness (PSLF) program through actions taken by the Biden-Harris administration. This is a truly massive shift in policy by any administration to come before US Secretary of Education Miguel Cardona pointed out.

“Before President Biden and Vice President Harris entered the White House, the Public Service Loan Forgiveness program was so riddled by dysfunction that just 7,000 Americans ever qualified and countless public servants were trapped making payments on debts that should have been forgiven,” said Cardona in a statement.

“From Day One, the Biden-Harris administration made fixing this broken program a top priority, and today, I’m tremendously proud that over one million teachers, nurses, social workers, veterans, and other public servants have received lifechanging loan forgiveness,” the secretary added.

Cardona used the opportunity to encourage college students across the United States to pursue a career in public service. He said not only is it “a noble calling” but that it can be “a reliable pathway to becoming debt-free within a decade.”

What is the Public Service Loan Forgiveness (PSLF) program?

Created in 2007, the Public Service Loan Forgiveness (PSLF) program allows certain federal student loan borrowers to have their debt forgiven after 10 years of working full-time for a qualifying employer. The program is designed to encourage people to work in the public sector so only jobs with the government or 501(c)(3) non-profits qualify.

Borrowers must make 120 timely qualifying monthly payments, ten years in total, under an income-driven repayment plan while working for a qualifying employer. The payments don’t need to be consecutive but you must be working for a qualifying employer when you apply for the PSLF program and at the time the remaining balance on your loan is forgiven.

How to apply for the Public Service Loan Forgiveness program

Borrowers that want to take advantage of the PSLF program should first check that their employer qualifies. Jobs with the federal, state, local or tribal government as well as not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code may make you eligible to benefit from the PSLF program. However, jobs through a contractor that is doing work for a qualifying employer do not count. Federal Student Aid provides an employer search tool that you can use to check if your employer qualifies.

You will need to certify with your employer each year that you are working full-time or at least 30 hours per week, whichever is greater. Your loans must be part of the federal Direct Loan Program, private loans do not qualify. If you have other types of federal loans you may be able to consolidate them into a Direct Consolidation Loan to become eligible.

You will also need to be an income-driven repayment plan before you begin making qualified repayments. You must make the payments for the full amount due according to your bill and payments can be no later than 15 after your due date. And the payments must be made while you are employed by a qualifying employer full-time. Only payments after 1 October 2007 qualify.

Any payments made during periods when you are not required to make them do not count such as in-school status, grace period, deferment or forbearance. However, suspended payments during the covid-19 administrative forbearance will be credited toward PSLF as though you made on-time monthly payments as part of your qualifying repayment plan.

Once you have met all of the above requirements, you can submit a Public Service Loan Forgiveness application. You can fill out the application online using the PSLF Help Tool or download a copy and fill it out by hand to submit your application. Remember that you must be working full-time for a qualifying employer when you apply.