Student-loan borrowers in public service will face 'inordinate confusion and harm' if Biden fails to extend temporary relief, 20 state attorneys general say

• The Education Department announced a waiver through October 31 to expand student-debt relief for public servants.
• 20 state attorneys general called on the department to extend the waiver and prevent confusion.

There's a lot of uncertainty in the student-loan industry right now, and attorneys general want to ensure relief for public servants isn't part of that.

On Monday, 20 state attorneys general — led by Illinois' Kwame Raoul and Massachusetts' Maura Healey — wrote a letter to President Joe Biden and Education Secretary Miguel Cardona urging them to extend a temporary waiver for borrowers enrolled in the Public Service Loan Forgiveness (PSLF) program, which is intended to forgive student debt for government and nonprofit workers after ten years of qualifying payments.

While the first group of PSLF borrowers should have become eligible for loan forgiveness in 2017, leading up to Biden's presidency, 98% of borrowers had been denied. That's why the Education Department announced a series of reforms to the program in October, one of which was a waiver through October 31, 2022 that allowed any past payments to the program, included those deemed ineligible, to count toward forgiveness progress. The attorneys general don't see why that relief should have an end date.

"As you know, the pandemic has placed a tremendous strain on public service workers, many of whom served on the frontlines making difficult personal sacrifices to keep our communities safe, healthy, and educated," they wrote. "These sectors, including our healthcare and education workforces, are suffering employee burnout and shortages."

"It is of the utmost importance that the PSLF Program function to alleviate the financial strain associated with student debt and support these critical sectors as our nation continues its recovery," they added. "We believe this can only be accomplished through expansion and extension of the waiver."

The attorneys general said that many borrowers still may not be aware of the PSLF benefits, with some loan companies being slow to update its communications surrounding the temporary benefit. Additionally, all PSLF accounts are being transferred to a new company — MOHELA — and the attorneys general said that the company's ability to manage the complexity of PSLF is "largely untested."

"Moreover, we believe that inordinate confusion and harm to public service workers will result from reimposing the failed traditional PSLF rules on November 1, 2022," they wrote.

As of June 1, the Education Department has approved $8.1 billion in loan forgiveness for 145,000 borrowers under its reforms, but a report from advocacy group Student Borrower Protection Center found the relief remains largely untouched. A recent analysis from the group found that while 9 million public servants are eligible for student-loan forgiveness, only 2% of them have actually gotten their debt wiped out since November 2020. And fewer than 15% have filed paperwork to track their payment progress.

The Education Department has not commented on the possibility of a PSLF waiver extension, but head of Federal Student Aid Richard Cordray said during a conference in June that he is concerned the waiver will expire before all eligible borrowers can make use of it.

"We are pushing hard to get approval if we can get it extended," Cordray said.