In 2007 Congress created a student loan forgiveness program called Public Service Loan Forgiveness (PSLF). Borrowers holding federal student loans working in certain public service jobs can make at least 10 years of qualifying payments to have the remainder forgiven by the Department of Education (ED).
Now one company is trying to make it easier for borrowers to be in that position.
“We're starting to see career decisions being made for the economic value of getting loan forgiveness,” Jason DiLorenzo, founder of PSLFJobs.com, told Yahoo Finance.
As a result, “more and more people [are] considering working in a nonprofit or government environment” to reap the benefits of PSLF, he said.
Through DiLorenzo’s platform, borrowers can find jobs that allow them to apply for the PSLF track. “The public-service sector is a lot larger than you might think – 35 million jobs in the United States, about 12 or 13 million 501(c)(3) non-profit organizations, and then an additional 22 million federal, state, or local governments or agencies,” he noted.
Users on the platform can apply for jobs, post their resumes, and also figure out their payments if they apply for PSLF.
Though the system is not perfect – out of 220,000 applications filed by borrowers, only about 4,400 were approved, which is about 2%, at ED’s last count on Aug. 31 – borrowers are still keen to give the program a shot as several politicians have promised fixes. (It’s worth noting that about half of the applications were rejected because borrowers didn’t make the required payments, and a quarter were missing information.)
But for those that do make it through, the average balance discharged was approximately $73,000, according to data from the Department of Education. In contrast, a recent college graduate is carrying around $28,950 in student debt, according to a report by the Institute for College Access and Success.
Biden proposal ‘doesn’t move the needle’ for PSLF borrowers
And even though presidential candidate Joe Biden is proposing to cut $10,000 in student loan debt for borrowers across the board, the program is still exceptionally useful for public service workers because borrowers on the PSLF program generally have a lot more debt.
“It doesn't move the needle at all,” DiLorenzo said of Biden’s plan. Particularly “for those larger debt balances where borrowers are pursuing a loan forgiveness either through public service, or the income-driven plans today have longer-term loan forgiveness available.”
And though President Donald Trump is proposing to eliminate the PSLF program entirely, there could be broader loan forgiveness programs, DiLorenzo added, and hence a “new universe of options available.”
But both candidates -- Trump and Biden -- are “trying to simplify the options in what is ultimately kind of a complex and evolving marketplace right now,” said DiLorenzo.
Aarthi is a reporter for Yahoo Finance. She can be reached at email@example.com. Follow her on Twitter @aarthiswami.