Before exploring Pennsylvania state-specific programs, let’s discuss the federal student loan forgiveness programs offered by the U.S. Department of Education to all Americans. These programs provide relief for federal loans based on factors such as your profession or income.
Public Service Loan Forgiveness Program
The PSLF Program is designed for individuals with Direct Loans working in qualifying public service jobs. To be eligible, borrowers must make 120 qualifying payments under a qualifying repayment plan while working full-time for a qualifying employer, such as a government agency, public school, or nonprofit organization.
Income-Driven Repayment Plan Forgiveness Waiver
Beginning in Spring 2023, a substantial portion of borrowers with federal student loans that have been in repayment for 20 years or longer will automatically obtain relief, allowing the outstanding balance of their debt to be discharged.
This notable change results from an updated Income-Driven Repayment (IDR) account adjustment introduced by the Department of Education in April 2022.
The update awards borrowers credit towards income-based repayment forgiveness by factoring in time spent in repayment, forbearance, and select deferment periods, making the total number of monthly payments made no longer relevant.
While the adjustment is available to all federal student loan borrowers, those holding FFEL or Perkins Loans may be required to consolidate their loans into a Direct Consolidation Loan. To facilitate this process, borrowers can effortlessly consolidate their loans free of charge on the Federal Student Aid website, StudentAid.gov.
Those who refinanced their federal loans with private lenders aren’t eligible for relief. Sadly, private student loan forgiveness options are limited.
Teacher Loan Forgiveness Program
Eligibility criteria include working full-time for five consecutive years in a low-income school or educational service agency and taking out federal Direct or Stafford Loans after October 1, 1998. Forgiveness amounts vary, with up to $17,500 for highly qualified math, science, and special education teachers and up to $5,000 for other eligible teachers.
President Joe Biden’s Broad Debt Cancellation Plan
The Biden administration’s student loan relief program aims to significantly reduce the remaining balance on education loans for millions of borrowers. This plan proposes eliminating up to $20,000 of debt for Pell Grant recipients who meet income criteria and up to $10,000 for other qualifying borrowers with loans held by the federal government.
New data from the Department of Education reveals that nearly 1.2 million Pennsylvania residents applied or were automatically eligible for federal student loan relief under this initiative, which targets borrowers earning less than $125,000 annually.
The application process is currently on hold as the Supreme Court assesses the program’s legality following a challenge by six Republican attorney generals. In the meantime, the Biden administration has extended the pandemic-related payment pause and interest rate freeze on loan payments.
Key findings from the data, covering applications between Oct. 14 and Nov. 11, include:
An estimated 1.79 million Pennsylvanians were eligible for relief, with 1.15 million applying or automatically qualifying.
742,300 Pennsylvania residents received full approval for student loan repayment relief.
Pennsylvania’s District 3 (Philadelphia) had the highest number of applicants (96,800), while District 15 had the lowest (52,000).
In districts with more registered Democrats than Republicans, 65% of eligible borrowers applied, compared to 63% in Republican-majority districts.
Lower-income districts saw higher approval rates for applicants than wealthier areas.
Nonwhite majority congressional districts in Pennsylvania had more forgiveness applications per capita than majority-white districts.
The outcome of the Supreme Court’s decision remains uncertain, but these statistics underscore the potential impact of the student loan relief plan on Pennsylvania’s borrowers.