The United States’ controversial Public Service Loan Forgiveness (PSLF) program appears to be finally doing what it was intended to do — forgive student loans to eligible borrowers who have completed employment and repayment requirements.
More than 550,000 people are expected to see their debt wiped away following changes to the complicated rules governing eligibility.
Previously, some 98 per cent of applicants were rejected.
Eligibility for the PSLF has been expanded until 31 October so borrowers who had older loans that didn’t originally qualify, as well as those who were in the wrong repayment plan but met all other requirements, can reapply.
The program has long been criticised for being difficult to navigate, with borrowers receiving little help from their loan servicers, the companies that handled the billing.
Many borrowers said they found out they weren’t eligible for forgiveness only after making what they thought were a decade’s worth of qualifying payments.
Among those was Katherine Rickfelder, a Florida public school teacher, who has now been told her student debt balance has been reduced to zero.
“I cried when I got the letter. I honestly feel like I can finally breathe again,” Ms Rickfelder said.
“I love teaching, but it has always been a financial struggle. Now I don’t have to keep finding a workaround for the debt,” she said.
Over the years, the money she borrowed for her undergraduate and master’s degrees ballooned because her payments were not covering the interest on the student loans.
Her debt grew to more than $US189,000 ($A263,000).
Now, in addition to the cancellation of her remaining student loan debt, she also received a refund for the extra payments she made since reaching the PSLF qualifying period of 10 years.
Washington, 25 November 2021