Student-loan forgiveness for borrowers in New York just got easier
- New York Gov. Kathy Hochul announced plans to protect student-loan borrowers in the state.
- Those plans include an easier application process for Public Service Loan Forgiveness and stopping transcript withholding.
New York Governor Kathy Hochul has some good news for student-loan borrowers in the state.
Five months after taking office, Hochul on Tuesday released a 200-page State of the State for 2022, which outlines policies and plans to improve the lives of New Yorkers, from expanding the healthcare workforce to accelerating climate action. It also included plans to improve access to relief for the 2.4 million student-loan borrowers in New York.
"To better support New Yorkers facing high debt burdens, Governor Hochul will invest in effective student debt assistance programs, focused on helping New Yorkers navigate the student loan repayment system," the report said. "With this investment, Governor Hochul will help ensure even more New Yorkers can finally say, 'I am student debt free.'"
According to the report, Hochul plans to protect student-loan borrowers in four ways, three of which are intended to make loan forgiveness more accessible:
- Attract students into healthcare by offering free tuition, covering instructional costs, and offering stipends for income lost while in school to prevent accumulation of student debt.
- Automate "as much as possible" the application process for borrowers seeking to participate in the Public Service Loan Forgiveness (PSLF) program, which forgives student debt for public servers, like teachers and nonprofit workers, after ten years of qualifying payments.
- Propose legislation to stop the withholding of transcripts from students who owe small amounts of money, like tuition fees or parking tickets.
- And make loan forgiveness provided by the Higher Education Services Corporation, which awards graduates in certain fields like social work and legal services, tax exempt.
As noted in Hochul's report, since the first round of borrowers became eligible for relief under PSLF in 2017, the federal program ran up a 98% national denial rate due to administrative complications, like paperwork errors, leaving many public servants without the relief they were promised. Although the program is federal, Hochul is reforming it on a state level by proposing legislation to allow the state to share employee records with the Education Department so borrowers would not have to do so themselves.
In October, President Joe Biden announced a series of reforms to the program, including a temporary waiver to allow borrowers to count payments from any federal-loan programs or repayment plans toward loan forgiveness through PSLF, including programs and plans that were not previously eligible. Hochul's plans will add onto this relief.
In addition, her proposal to stop the withholding of transcripts is something a number of colleges across the country have worked to end during the pandemic. Institutional student debt — the type Hochul referred to — is debt owed by students to schools, and can take the form of overdue tuition bills and other smaller fines. Colleges can hold students' transcripts as collateral for the debt and prevent enrollment in classes until the debt is paid off, making it difficult to prepare for post-graduate life.
These changes come amid the pause on student-loan payments, with waived interest, that Biden recently extended for for the third time through May 1. While this federal relief is welcome to 43 million borrowers across the country, some progressive lawmakers still want student debt completely wiped out so reforms like Hochul's won't be warranted at all.