Earlier this month, the Department of Education announced major fixes to a well-intentioned yet broken program that was designed to help millions of teachers, police officers, military personnel and other public service workers alleviate student loan debt.
The Public Service Loan Forgiveness (PSLF) Program is a contract with the American people. By offering significant loan forgiveness to borrowers who have worked in public service jobs for 10 years and made 120 loan repayments, it greatly strengthens this country.
But the program has been failing, as it is riddled with flaws and needless bureaucratic hurdles. Due to a combination of poor implementation and poor interpretation of program guidelines, many workers struggle to get their loans forgiven. The system is confusing, and many borrowers have made years of payments only to find these payments didn’t qualify for forgiveness.
This is unacceptable. Our government made a promise to public service workers to help them, and we cannot let them down. We are deeply grateful that the Biden administration is temporarily making the program easier to navigate and is looking for long-term solutions. But ultimately, we need Congress to get on board and permanently fix this broken system.
The PSLF Program was enacted with bipartisan support and signed into law by President George W. Bush in 2007. The logic for the program is simple: Public service jobs generally pay less than jobs in the for-profit sector. And many students emerge from their education with large student loan debts. Consequently, public service employers struggle to attract workers. PSLF helps alleviate this problem — which is particularly acute in smaller cities and rural areas — by providing an incentive for students to enter the public sphere.
As mayor of Houston and president of the African American Mayors Association, I can say with certainty that the program is indeed crucial to help government agencies and public interest organizations recruit and retain talented employees in critical service fields. It’s an important lifeline for cities big and small. Communities across the country struggle to secure the personnel they need in their education, health care, law enforcement and justice systems. Retention is a particular problem; it is common for younger workers to take public service jobs to gain experience and then use that experience to move on to higher-paying jobs in the profit sector. PSLF provides a major incentive for young workers to remain in public service for at least 10 years and greatly increases their ability to contribute to their communities.
PSLF can also provide a general boost to the American economy. Today, students have a combined $1.7 trillion in debt. This places an enormous drag on our economy by preventing many young people from buying homes and cars or starting new businesses.
Student loan debt is a particularly big problem for Black Americans. Black students with bachelor’s degrees owe $7,400 more on average upon graduation than White grads, according to the Brookings Institution. And the gap widens over time: After four years, Black grads hold almost $53,000 in debt — nearly twice as much in student debt as White students. The PSLF can help level the playing field for African Americans.
Thankfully, the Biden administration will employ temporary measures to give many applicants the help they need to obtain loan forgiveness. Borrowers, for example, will be able to get credit for previous payments that were originally not counted toward PSLF. The Department of Education estimates that this policy will help more than 550,000 borrowers, with 22,000 of them immediately eligible for loan forgiveness. This is huge, considering only 16,000 borrowers have received loan forgiveness under the program. But it will only run through October of next year. Now, the administration and Congress must make permanent changes to ensure that the PSLF program reaches its full potential. One year won’t be enough time to address the systemic challenges within the PSLF program. Without addressing the rigidity of the payment standards, the program will inevitability break again.
To continue the success of the program for generations to come, PSLF should permanently accept all types of federal repayment payment plans, including allowing borrowers to consolidate their loans without losing credit for payments made prior to consolidation while they were working in public service jobs. And borrowers should be entitled to loan forgiveness if the total amount of their payments is equal to 120 monthly payments. This includes payments made in installments and payments “paid ahead” of the amount due.
PSLF strengthens communities throughout our nation 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 them where the country needs them most.
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