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Gillibrand pushes for more flexible student loan forgiveness program

New York U.S. Senator Kirsten Gillibrand speaking over Zoom (file photo)
Courtesy of the Office of U.S. Senator Kirsten Gillibrand
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New York U.S. Senator Kirsten Gillibrand speaking over Zoom (file photo)

Changes to federal student loan forgiveness are set to go into effect, but Senator Kirsten Gillibrand of New York says more should be done to assist public service workers.

The federal Public Service Loan Forgiveness program is pitched as a way for people who go into certain careers – government, 501c3 not-for-profits – to have their student loans forgiven after 10 years. But there are requirements.

In addition to having a certain kind of job, those who qualify must work full time, have a Direct Loan – a type of federal student loan — repay under an income-driven repayment plan, and make 120 qualifying payments. Qualifying payments meaning on-time, for the full amount, and while fully employed.

U.S. Senator Kirsten Gillibrand wants to improve the PSLF program. Releasing a report on a press call on Thursday, the New York Democrat said only a small amount of applicants actually get approved for forgiveness under the program.

“Of the PSLF participants who live in New York, just 1.2 percent have had their loans forgiven. And in total, PSLF participants in New York still owe more than $8 billion. That accounts for nearly 10 percent of all outstanding federal student loan debt in the state. It’s so important that we fix this program and make it work for the people who have dedicated our professional lives for our community and our state,” said Gillibrand.

Eliza Camire, who works at Skidmore College, where WAMC operates its Southern Adirondack Bureau, says a colleague told her about PSLF when she was hired full-time in 2011.

“And so I actually went through the steps to put in the correct Direct Loan consolidation, and was hoping to – at this point I’ve been at Skidmore for 10 years – so I was hoping that I probably would be done by now,” said Camire.

But she isn’t. For one thing, the income-based monthly payment for her federal loan was too high – about $500 a month. So she postponed her payments until 2013. But even after making payments for over seven years, Camire isn’t making much progress on her loans.

“I don’t touch my principal, so the balance number changes. So I can’t actually, I can’t get it any lower than it is, so the only choice I have is for it to be forgiven,” said Camire.

Camire said the pause in student loan payments during the pandemic allowed her to tackle her private loans, but the federal loans remain stubborn.

Earlier this month, the U.S. Education Department announced several new temprorary rules to allow more people to qualify for PSLF. While before, loan payments had to be made on-time and in-full, the new rules allow any prior payment to count as a qualifying payment, regardless of loan type or repayment plan. Additionally, previously denied PSLF applications can be reviewed, credit can be given for payments denied for technical reasons, and improvements were made to the application process.

Gillibrand commended these changes but says Congress needs to do more.

She is proposing legislation that includes two changes. First, the legislation would create a new option for borrowers to have half of their loans forgiven after five years.

“There are more than 12,000 borrowers in New York who could have half of their debt discharged immediately if we made just that one change. And second, it would expand eligibility and reduce the confusion that has so often led to borrowers being denied forgiveness by permanently allowing all types of loans and repayment plans to qualify,” said Gillibrand.

And as important essential jobs are in short supply due to the pandemic and the economic recovery from last year’s shutdown, Gillibrand said her changes could encourage more people to seek public service jobs.

“We need people to go into nursing. We need people to go into teaching. We need people to go into public service careers. We need more firefighters and more police officers. So it’s important.”

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