Whitehouse, Merkley Introduce Bill to Simplify, Strengthen the Public Service Loan Forgiveness Program

Washington, DC – Senators Sheldon Whitehouse (D-RI) and Jeff Merkley (D-OR) unveiled today the Simplifying and Strengthening PSLF Act, to streamline and improve the troubled federal program to help Americans pursuing careers in public service – like firefighters, teachers, police officers, and those working for nonprofits – have their student loan debt forgiven.

The Public Service Loan Forgiveness program promised loan relief to Americans willing to pursue a career in public service.  Instead, they landed in a bureaucratic nightmare with no loan forgiveness in sight,” said Whitehouse.  “This bill would build on the Biden administration’s important fixes made last fall, and to draw more bright young people to work for the public good.”

“Higher education can create doors to opportunity but, too often, the crushing burden of student loans create millstones of debt for borrowers for years,” said Senator Merkley.  “Public service already often comes at a financial sacrifice, and it’s even tougher to manage if you’re carrying huge student loans.  This bill to simplify and strengthen the PSLF program will ensure careers in public service are accessible to everyone striving to do this important work and find a pathway to a stable economic future for themselves and their families.”

Congress created the PSLF program in 2007 to encourage talented workers to pursue public service professions that in many cases do not pay as much as private sector jobs.  To apply for the program, borrowers must have made 120 monthly payments on Direct federal student loan types after October 1, 2007.  Borrowers must also have worked at a qualifying job in government or nonprofit at the time the payments were made.  If borrowers meet these criteria, their remaining loan balance is forgiven.

Yet PSLF has been troubled for years.  Due to the program’s narrow and confusing specifications, many borrowers have found after making years of what they believed to be valid payments that they do not qualify for loan forgiveness.  The Department of Education made a number of important fixes to the administration of the program in October 2021, but there is substantial work ahead in permanently addressing PSLF applicants’ concerns.

In addition to Make the Biden Administration’s October 2021 changes to the PSLF program permanent, the Simplifying and Strengthening PSLF Act would:

  • Reduce the number of payments needed to qualify for PSLF loan forgiveness from 120 payments over 10 years to 60 payments over 5 years while working for an eligible employer;
  • Allow any prior period of repayment to count as a qualifying payment, regardless of federal loan type, repayment plan, or whether payments were made in full or on time.
  • Clarify eligibility of active duty military and Peace Corps volunteers whose loans were in deferment during their service tenure to expand participation in the program.
  • Allow parent PLUS loan holders and couples who have previously joint-consolidated their FFEL federal loans to re-consolidate them into one Direct Loan for PSLF eligibility.

After hearing from Rhode Islanders caught in the PSLF bureaucracy, Whitehouse has doggedly pursued fixes to the program.  In 2018, Whitehouse helped secure $350 million to provide additional conditions under which a borrower may become eligible for loan forgiveness if some or all of the payments made on their Direct Loan Program loans were under otherwise non-qualifying repayment plans.

Student loan debt is a massive burden on American families.  According to the Federal Reserve Bank of St. Louis, student loan borrowers owed a combined $1.75 trillion to the federal government and private lenders as of April 2022.   The average U.S. household with outstanding student debt owes $57,520 in loans, according to NerdWallet’s 2020 household debt study.  Student loan debt is also shared among a large swath of American borrowers, with 48 million Americans – or one in eight – carrying student loan debt of some kind.

Full bill text is available here.