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A federal student loan forgiveness program considered by many to be overly complex and largely ineffective is undergoing some big changes that could dramatically increase the reach of the assistance. The fixes include an overhaul of disqualification rules, a reconsideration of what kinds of payments and services count toward forgiveness, and an expansion of the types of loans that count toward forgiveness.

The Public Service Loan Forgiveness Program was originally designed to provide debt relief for a range of jobs considered public service — including some roles as physical therapists and physical therapist assistants. Under PSLF, qualifying individuals receive loan forgiveness on the remaining balance of Direct Loans after making 120 qualifying monthly payments.

The problem, according to many critics, is that the various qualifications were complicated, excluding too many from the program. In a press release, the U.S. Department of Education acknowledges that the program's promise was "largely unmet" and that "too few borrowers receive forgiveness."

"This is great news for those with federal student loans who are or have been employed full-time by qualifying employers,” said Steven Chesbro, PT, EdD, APTA's vice president of education, who noted that APTA’s report “Impact of Student Debt on the Physical Therapy Profession” identified PSLF's shortcomings in meeting the needs of graduates working for qualified employers such as public schools, the armed services, and nonprofit organizations.

"Findings in that report suggested that physical therapists anticipated it taking an average of 16 years to pay off their total student debt loan balance," Chesbro said. "For those who qualify for loan forgiveness through PSLF, having a 120-payment cap is significant.”

The changes will be rolled out in the coming months. Detailed information on the revamped program, as well as guidance on qualifying for PSLF relief are available on the program's website.

Among the changes:

A temporary waiver on prior payments made toward PSLF that didn't qualify. Beginning immediately, PSLF will count all prior payments made by borrowers toward PSLF regardless of the loan program. Until now, the types of payment plans that qualified for PSLF forgiveness were limited, and loan servicing companies frequently switched borrowers' loans from qualifying to nonqualifying systems. DOE believes this change will have a significant effect on borrowers who had loans from the Federal Family Education Loan program — about 60% of all individuals in roles that qualified for PSLF — only to learn that they had been misled by some loan services and found their payments disqualified from PSLF. The waiver runs through Oct. 31, 2022.

A temporary waiver on payment disqualifications due to minor violations of payment rules. Also included in the waiver program: a reconsideration of payments that were disqualified because of relatively insignificant variance from requirements around details such as choice of payment plan, timing, and other minor issues. "In some instances,” DOE said, “borrowers missed out on credit toward PSLF because their payments were off by a penny or two or late by only a few days." The waiver runs through Oct. 31, 2022, and will be extended to borrowers who have not yet applied for PSLF but do so by the October waiver deadline.

Counting months of active-duty military service toward PSLF. Under the changes, months of active duty will count toward PSLF payment, even if the service member's loans were in deferment or forbearance.

Help for federal employees to access PSLF. DOE will match its own data with employee data from other federal agencies (including the military) to identify employees who may benefit from PSLF but are not yet in the program.

A full review of all denied PSLF applications. All previously denied PSLF applications will undergo review, and DOE will set up an interim reconsideration program after the review is completed for any applicants who believe there were errors in application processing. In addition, DOE will also oversee an independent external review of PSLF processing.

Justin Elliott, APTA vice president of government affairs, says the DOE change reinforces one of the main pillars of APTA's strategic plan: to foster the sustainability of the physical therapy profession by addressing PT and PTA debt burden.

“APTA applauds these changes by the Department of Education to the Public Service Loan Forgiveness Program," Elliott said. "There's much work to be done in taking on issues around student debt, but these reforms are a step in the right direction."

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