Editor’s Note: This story has been updated to correct the state the lawmakers represent.
(NEXSTAR) – Two New Jersey lawmakers have introduced a new bill that would make it easier for some previously ineligible public servants to qualify for loan relief under a federal program. It is the latest attempt to make changes to the 15-year-old program as Americans await a decision on the Biden administration’s widespread student loan forgiveness.
Sen. Bob Menendez and Rep. Donald Norcross, both New Jersey Democrats, introduced the “Second Chance at Public Service Loan Forgiveness Act” on Thursday. The law project proposes to resolve “long-standing problems” with the Public Service Loan Forgiveness Program, or PSLF, and allow “millions of previously ineligible civil servants” to have their loans forgiven.
PSLF was created in 2007 to help certain public sector employees obtain a credit discount after 120 repayments over 10 years. According to a September report from the Student Borrower Protection Center, the number of applicants whose loans have actually been forgiven is small: of the 1.3 million borrowers who apply for debt relief through the PSLF, only 1 in 5 are on track to receive relief by 2026.
In 2021, the U.S. Department of Education announced a change that temporarily waives specific PSLF requirements to provide borrowers with credit toward loan forgiveness, regardless of their federal loan type or they had been enrolled in a specific payment plan, as long as they consolidated their debt into a direct loan before the waiver expired.
Before the to renouncer, borrowers had to have a specific federal loan – a direct loan – to be eligible for the PSLF. Borrowers could consolidate their debt into direct loans for PSLF, but any payments made on the loans prior to consolidation were not counted in the required tally.
This waiver is currently due to expire after October 31, 2022, meaning eligible borrowers have less than four months to apply.
The newly proposed bill calls for codifying the provisions of the PSLF waiver and addressing issues raised by borrowers and advocacy groups. This includes allowing public servants who received loans or public service before the program was created to receive relief, replacing the requirement of 120 payments with 10 years of public service, ensuring eligibility for Parent PLUS loans, expand eligibility to those who work 30 hours per week and provide additional definitions of public service employment.
The law would also allow teachers to simultaneously qualify for the PSLF and the Teacher Loan Forgiveness Program.
Last week, Rep. Joe Courtney (D-Conn.) introduced a similar bill to make it easier for officials to get their student loans forgiven. The proposal includes halving the time it takes to get relief by reducing the number of payments needed to qualify for PSLF relief from 120 over 10 years to 60 over five years for borrowers working with an eligible employer. It would also allow past payments to be counted towards necessary payments, regardless of loan type, payment plan, or whether payments were made on time.
Courtney’s bill would expand access to the PSLF for active-duty service members and Peace Corp volunteers whose loans were suspended while serving. Currently, some loan deferrals are not eligible for PSLF relief.
Additionally, under Courtney’s bill, parents with MORE ready – otherwise known as the Parental Loan for Undergraduate Students – or couples who have jointly consolidated their loans into a Federal Family Education Loan, or FFELwould be allowed to consolidate their loans into a direct loan, which would then be eligible for the PSLF.
Earlier this month, the Biden administration proposed sweeping changes to the federal student loan system, including a permanent modification to the PSLF that would allow more payments to qualify for the program, including partial, lump sum payments. and late. It would also allow particular types of deferments and abstentions to count for the PSLF, and it would create a formal reconsideration process for applicants who were denied access to the program.
President Biden, when interrogates on student loans on Wednesday, said he would make a decision “by the end of August.” The current payment pause on federal student loans is set to expire on August 31.