Department announces fixes to loan forgiveness scheme

The United States Department of Education announced on Wednesday 6 October a host of major changes to the Public Service Loan Forgiveness (PSLF) Program, which could bring more than 550,000 borrowers closer to being debt-free, writes Annie Nova for CNBC.

The PSLF Program, which was signed into law by then-president George W Bush in 2007, allows non-profit and government employees to have their federal student loans cancelled after 10 years, or 120 payments. The Consumer Financial Protection Bureau estimates that one-quarter of American workers could be eligible. However, the programme has been plagued by problems, making people who actually get their debt forgiven a rarity. Fewer than 5% of borrowers who’ve applied for the relief have qualified.

Now, the Department of Education hopes to give many of the borrowers who’ve been excluded from the relief a second chance. “Borrowers who devote a decade of their lives to public service should be able to rely on the promise of Public Service Loan Forgiveness,” said Education Secretary Miguel Cardona, in a statement. “The system has not delivered on that promise to date, but that is about to change.”
Full report on the CNBC site