Earlier this month, the Department of Education announced major fixes to a well-intentioned but non-functioning program designed to help millions of teachers, police, military and other public service workers reduce their student debt.
The Public Service Loan Forgiveness (PSLF) program is a contract with the American people. By offering large loan discounts to borrowers who held public service jobs for 10 years and earned 120 loan repayment, this greatly strengthens this country.
But the program failed because it is riddled with defaults and unnecessary bureaucratic hurdles. Due to a combination of bad Implementation and poor interpretation According to the guidelines of the program, many workers find it difficult to get their loans canceled. The system is confusing, and many borrowers made payments for years only to find that those payments were not eligible for a rebate.
This is unacceptable. Our government has promised public service workers to help them, and we cannot let them down. We are deeply grateful that the Biden administration is temporarily making it easier to navigate the program and seek long-term solutions. But at the end of the day, we need Congress to step up and fix this flawed system for good.
The PSLF program was promulgated with bipartisan support and promulgated by President George W. Bush in 2007. The logic of the program is simple: Public service jobs generally pay less than jobs in the for-profit sector. And many students leave their studies with large student debts. As a result, public service employers struggle to attract workers. The PSLF helps alleviate this problem, which is particularly acute in small towns and rural areas, by encouraging students to enter the public sphere.
As the Mayor of Houston and President of the Association of African American Mayors, I can say with confidence that the program is indeed crucial in helping government agencies and public interest organizations recruit and retain talented employees. in critical service areas. It is an important lifeline for cities large and small. Communities across the country are struggling to get the staff they need in their education, health care, law enforcement and justice systems. Retention is a particular problem; It is common for young workers to take public service jobs to gain experience and then use that experience to move into higher paying jobs in the for-profit sector. The PSLF is a major incentive for young workers to stay in the public service for at least 10 years and greatly increases their ability to contribute to their communities.
The PSLF can also provide a general boost to the US economy. Today, students have a total of $ 1.7 trillion in debt. It takes a huge toll on our economy, preventing many young people from buying homes and cars or starting new businesses.
Student loan debt is a particularly significant problem for black Americans. Black students with a bachelor’s degree owe an average of $ 7,400 more upon graduation than white graduates, according to the Brooking Institution. And the gap is widening over time: After four years, black graduates owe nearly $ 53,000 – nearly twice as much student debt as white students. The PSLF can help level the playing field for African Americans.
Fortunately, the Biden administration will use temporary measures to give many applicants the help they need to secure a loan forgiveness. Borrowers, for example, will be able to obtain credit for past payments that were not originally recorded in the PSLF. The Department of Education estimates that this policy will help more than 550,000 borrowers, including 22,000 who are immediately eligible for loan forgiveness. This is huge, considering that only 16,000 borrowers received loan forgiveness under the program. But it will only run until October of next year. Now, the administration and Congress must make permanent changes for the PSLF program to reach its full potential. One year will not be enough to address the systemic challenges within the PSLF program. Without addressing the rigidity of payment standards, the program will inevitably be broken again.
To continue the success of the program for generations to come, the PSLF should permanently accept all types of federal repayment plans, including allowing borrowers to consolidate their loans without losing credit on payments made prior to consolidation while they worked in the public service. And borrowers should be entitled to loan forgiveness if their total payment amount equals 120 monthly payments. This includes payments made in installments and payments “prepaid” on the amount owed.
PSLF strengthens communities across our country by helping us recruit and retain talented Americans in critical public service jobs. Our cities and local governments need this program to work well so that we can usher in the next generation of talent and deploy it where the country needs it most.
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