The Administration of United States President, Joe Biden has initiated a process to potentially fix the troubled Public Service Loan Forgiveness (PSLF) program.
Senior Adviser to the Office of the Under Secretary for Education, Julie Margetta Morgan (pictured) said that in the past the PSLF program had not functioned the way it should.
“Fixing the PSLF program has been a priority for the Biden-Harris Administration since day one,” Ms Morgan said.
She said the Department of Education had issued a Request for Information about the PSLF — a formal process to gather public comments on the program.
Meanwhile a second Department of Education student loan servicer has quit, plunging the PSLF into further chaos.
Granite State Management and Resources, which handles more than a million student loan borrower accounts, announced it would suspend its student loan servicing operations by the end of the year.
The Granite State announcement comes on the heels of a similar decision by the Pennsylvania Higher Education Assistance Authority.
The abrupt departure of two major student loan servicers from the Department of Education’s massive Federal student loan system is likely to be disruptive to millions of borrowers.
The Department will now have to transfer 10 million or more student loan borrower accounts to other loan servicers.
Such transfers have historically been chaotic, with widespread problems including lost records and missed payments.
Complicating matters further is that the servicing transfers would have to occur in the midst of the expiration of the current moratorium on Federal student loan payments.
The legislation, enacted by Congress last year in response to the pandemic and recession, temporarily suspended all payments and froze all interest on Government-held Federal student loans.
The student loan payment pause was originally set to last six months, but was extended several times, with the current extension of the moratorium to expire on 30 September.
Under the Student Loan Forgiveness program, graduates who agree to work in lower-paid Public Service jobs for 10 years and make regular repayments on their loans during that time are to have the balance forgiven.
However, confusion over rules and the eligibility of some jobs has resulted in only a small number of applicants being successful in their applications for forgiveness.
Washington, 25 July, 2021
