Washington, DC – Included in the omnibus federal spending bill that cleared Congress tonight is a version of a bill offered by Senators Sheldon Whitehouse (D-RI) and Tim Kaine (D-VA) to fix a glitch in a federal loan forgiveness program that is leaving teachers, soldiers, social workers, and other public servants with massive loan balances they thought would be forgiven. The provision will help to relieve the financial burden for eligible middle-class families who sought to use the Public Service Loan Forgiveness (PSLF) program, which allows those pursuing public service careers to discharge student loan debt.
“Congress created this program so bright, talented people could use their college education for public service. But a growing number of them are finding, to their shock, that a glitch is keeping them from getting the relief they were promised. We need to fix that,” said Whitehouse. “There’s more to do, but I’m proud that a version of our legislation will help public servants continue their important work.”
“Americans who honorably serve our communities have earned much-deserved relief from crushing student loan debt in return for their time and commitment. But unfortunately because of confusion around a provision in the program, we were at risk of breaking that promise to Virginia teachers, social workers, nurses, and military servicemembers. I’m glad the Senate heard our call and joined Senator Whitehouse and I in moving closer to righting that wrong today,” Kaine said.
Congress established the bipartisan loan forgiveness program in 2007 to help teachers, social workers, military personnel, and other critical public service workers pursue sometimes lower-paying careers serving their communities without facing decades of crippling loan payments. The program allows borrowers to erase the balance of their student debt if they spend 10 years working for a nonprofit or government employer while making qualifying payments. Due to a lack of consistent and clear guidance from loan servicers and complicated program requirements, some borrowers believe they are making qualifying payments under the program when they are not.
Whitehouse and Kaine’s bill would allow loan forgiveness for public service borrowers who ended up in the wrong repayment plan. If borrowers had been making payments that were as much as they would have paid on a qualifying repayment plan, they would receive full credit for those payments toward loan forgiveness.
The version of the legislation in the spending bill includes $350 million to help borrowers in this situation on a first-come, first-serve basis. It would also require the Education Department to develop and make available a simple method for borrowers to apply for loan cancellation, and conduct outreach to help borrowers make use of the program.
Whitehouse and Kaine’s bill was endorsed by the National Education Association and the American Federation of Teachers.