Presidential Hopeful Aims to Give Feds Faster Access to Student Loan Forgiveness

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Federal employees would no longer have to wait until they had served 10 years.

New legislation from House Democrats would expand access to loan forgiveness for public servants and enable them to receive discounts throughout their initial tenure, rather than only after 10 years of service.

The 2019 Strengthening Loan Forgiveness for Public Servants Act (H.R. 3096) would direct the Education Department to cancel portions of federal employees’ federal student loan debts every two years, fully eliminating them after 10 years of service. The measure would reduce 15% of the employees’ debts after two years, another 15% after four years, an additional 20% after six years, another 20% after eight years and the final 30% after 10 years. Under current law, feds—and other qualified public servants—see the balance of their debt reduced only after making 120 monthly payments while working for the government.

Rep. Eric Swalwell, D-Calif., introduced the measure as part of a package of bills aimed at reducing the financial burden for college graduates. Another measure, the Fairness in Forgiveness Act (H.R. 3097), would expand eligibility for public service loan forgiveness to contractor employees at the Energy Department’s national laboratories. 

“This package of bills addresses some of the fundamental flaws in our borrowing system,” said Swalwell, who is one of more than 20 Democrats seeking the party’s nomination for president in 2020. “For too many Americans, college is not working the way it is supposed to. Getting an education should not cost you your livelihood, and these bills will help address the growing student debt crisis.”

Swalwell, who introduced his bill with 18 cosponsors, all Democrats, added the measure would give federal employees and other public sector workers debt reductions proportional to their service, rather than in one lump sum after 10 years. He called the measure a "more efficient encouragement of public service." 

"The Public Service Loan Forgiveness Program is an important tool to incentivize graduates to enter public service, but it shouldn’t have to be an all or nothing deal," Swalwell said. "Borrowers should receive federal loan relief as they serve – as 10 years is far too long to wait for public service loan forgiveness."

The Public Service Loan Forgiveness program was created in 2007, meaning employees first became eligible for its benefits in 2017. Nearly 75,000 borrowers had applied for debt relief as of March 2019, according to Education Department data. Just more than 1%, or 864, have been deemed qualified and actually received the benefit. About three-quarters of the applicants worked in government—the rest in the nonprofit sector—though no breakdown was available for federal versus state and local employees.

Most applicants were rejected because they lacked sufficient qualifying payments. Others were missing information on their applications or did not take out loans eligible for the program.

Many agencies also offer limited student loan repayment on a discretionary basis as a part of their incentive programs. In 2016, the latest year for which data are available, 35 agencies repaid a total of $71.6 million in student loan debt, or an average of $7,258 per employee.