WASHINGTON — Officials say a revamped program forgiving student loan debt for borrowers who work in public service will soon eliminate an estimated $2 billion in debt, affecting more than 30,000 people.
Not all of those borrowers have seen their debt discharged yet, Education Secretary Miguel Cardona said via Twitter. So far, he said about 10,000 people have seen a total of $715 million discharged as part of the updated Public Service Loan Forgiveness program. An Education Department spokesperson confirmed the numbers with Yahoo Finance.
Cardona said the other 20,000 borrowers will be notified about their debt cancellation via email "in the coming weeks."
"Check your inboxes!" he wrote.
Why are these debts being discharged?
The discharged debts are part of the troubled Public Service Loan Forgiveness program, which the Department of Education temporarily relaxed in October to make more borrowers eligible.
Congress started the program in 2007 to reward graduates with federally-backed student loans who go into public service, such as by working for the government or an eligible nonprofit organization.
But the program's requirements were notoriously tough, with only 5,500 borrowers getting their loans erased between its inception and October 2021. More than 90% of applicants were rejected, with many making a decade of payments before discovering that they were ineligible due to having the wrong type of loan or repayment plan.
In October, the Education Department made changes that would make 22,000 borrowers eligible to get loans canceled, and another 27,000 could become eligible if they get previous payments certified. In total, the department said more than 550,000 borrowers would be moved closer to forgiveness.
“Borrowers who devote a decade of their lives to public service should be able to rely on the promise of Public Service Loan Forgiveness,” Cardona said in an October press release. “The system has not delivered on that promise to date, but that is about to change for many borrowers.”
The changes are seen as a short-term fix while the agency considers permanent improvements.
Who is eligible for student loan forgiveness?
According to the Education Department's student aid website, eligible graduates must:
- Be employed full time by a U.S. federal, state, local, or tribal government or not-for-profit organization (federal service includes U.S. military service);
- Have Direct Loans (or consolidate other federal student loans into a Direct Loan)
- Make 120 qualifying monthly payments (10 years)
Previously, borrowers needed to make the 120 payments under an income-driven repayment plan. Under the limited waiver, the department's website states that "any prior payment made will count as a qualifying payment, regardless of loan type, repayment plan, or whether the payment was made in full or on time."
The change applies to "borrowers with Direct Loans, those who have already consolidated into the Direct Loan Program, and those who consolidate into the Direct Loan Program by Oct. 31, 2022." Parent PLUS loans are not eligible.
To find out if you qualify under the changes, go to studentaid.gov.
The Associated Press contributed to this report.