Costello seeks to expand access to public service loan forgiveness

WASHINGTON, D.C. » Three area lawmakers have teamed with a Maryland congressman to introduce legislation to fix an error that has occurred to student loan borrowers who thought they were making qualified payments under the Public Service Loan Forgiveness (PSLF) program.

Left unfixed, the error could leave teachers, first responders, social workers, and other public servants with significant student loan balances, which they believed would be forgiven after years of timely payments during public service employment.

The PSLF Technical Corrections Act of 2017 would relieve this substantial financial burden for those who sought to use the PSLF program to reduce the burden of their student loan debt, but mistakenly enrolled in repayment plans that caused them to pay more than the PSLF program would have required, and which do not qualify for forgiveness under current law.

The bill, introduced by Rep. Ryan Costello, R-6th Dist., Rep. Brendan Boyle, D-13th Dist., Rep. Brian Fitzpatrick, R-8th Dist., and Rep. John Sarbanes (D-Md.), would allow loan forgiveness for public service borrowers who ended up in the wrong repayment plan.

Specifically, under the legislation, if a borrower has been making payments that were as much as they would have paid on a qualifying repayment plan while employed in public service, they would receive full credit for those payments toward loan forgiveness.

Created in 2007 to encourage more Americans to pursue public service careers despite the financial burdens of their student debt, this program promises to forgive the remaining balance of federal Direct Loans owed by full-time public service workers after they have faithfully paid on those loans for 10 years — 120 on-time payments — during public service employment. Due to complex program requirements, some borrowers believe they are making qualifying payments under the program only to find out that in fact they are not, as recently profiled in the New York Times.

“This legislation will provide a very helpful change to the Public Service Loan Forgiveness Program that will make sure public service professionals, such as first responders and teachers, who are working to make a difference in their communities receive the student loan forgiveness they have worked towards,” said Costello, co-chairman of the Public Service Loan Forgiveness Caucus. “If borrowers are making qualifying payments for PSLF standards but mistakenly enrolled in higher repayment plans, they must be allowed to apply those payments towards loan forgiveness under PSLF. Our legislation will ensure this happens.”

The legislation has been endorsed by the National Education Association and the American Federation of Teachers. Sens. Tim Kaine (D-Va.) and Sheldon Whitehouse (D-R.I.) introduced the Senate version of the bill concurrently.