The Biden administration is overhauling a student loan forgiveness program for public service employees that had become a notorious quagmire, introducing a sweeping set of fixes on Wednesday that Education Department officials said would help more than a half-million people get closer to the relief they had been denied for years, the New York Times reported. Previous patchwork efforts to mend the program have largely failed, brought down by the same complexity that crippled the original initiative. But this time, the agency is taking a chainsaw to the program’s rules to temporarily clear the way for many people who were previously rebuffed. Created by Congress in 2007 to attract people to vital but often low-paying government and nonprofit jobs, the program offered employees a generous incentive: After 10 years of work, those who had made their federal student loan payments on time would have their remaining debt wiped away. But to many, that promise proved to be a mirage. More than 98 percent of those who applied were rejected, because of convoluted rules and sloppy administration. The most consequential shift takes aim at a rule that snared an overwhelming number of applicants: the so-called wrong loan problem. When Congress enacted the forgiveness program, it limited eligibility to those with student loans made directly by the government. Since 2010, all federal student loans have been made and owned directly by the Education Department. But before 2010, most borrowers had government-backed bank loans known as Federal Family Education Loans. Hundreds of thousands of borrowers working in public service jobs made payments on those loans for years without realizing — because loan servicers often failed to tell them — that those payments would not count toward the 120 monthly payments they needed to rack up to have their loan forgiven. The Education Department had long resisted giving borrowers credit for those payments, insisting it lacked the authority to do so. But now, it is offering a limited waiver that will retroactively count those payments, which will benefit around 550,000 borrowers, the department said. Some 22,000 of those borrowers will automatically have debts totaling $1.7 billion wiped out because of the program changes, the agency said. That exceeds the 16,000 borrowers who have managed to get their debts forgiven through the program to date.
