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Student loan forgiveness is a lot closer for some borrowers, and they are pumped

Zahra Nealy (left) and Victoria Chamberlin both stand to benefit from recent changes to the Public Service Loan Forgiveness program.
Zahra Nealy (left) and Victoria Chamberlin both stand to benefit from recent changes to the Public Service Loan Forgiveness program.

The U.S. Department of Education has begun sending emails to thousands of teachers, nurses and other public servants to tell them they could have some of their federal student loan debts erased months — and even years — earlier than borrowers had expected.

Education Secretary Miguel Cardona highlighted the move Friday night on Twitter: "Our first batch of PSLF emails regarding loan forgiveness have all gone out to those with Direct Consolidation Loans and certified employment – check your inboxes! And if you didn't get one, hang tight! More are on the way."

The flood of emails comes after the department announced it would overhaul the troubled Public Service Loan Forgiveness (PSLF) program, including giving borrowers a retroactive waiver from some of its toughest rules. As a result, the department estimates it could erase the student loan debts of nearly 50,000 public service workers and help half a million more get closer to the loan forgiveness they were promised.

Some borrowers who have received emails and have been told they'll be getting additional credit toward loan forgiveness have taken to social media to celebrate.

When Victoria Chamberlin heard the news, it hit her: This could mean the end of her $70,000 in student loan debt. The U.S. Army veteran says she and her husband were cautiously elated.

"By the time our baby is 3," Chamberlin says, "both of us will be student loan debt free. And that's just unbelievable. We never thought it would be possible."

Zahra Nealy says she was listening to NPR one morning when she heard the news about the waiver that would likely help her too.

"I was so excited when I heard [it] in the shower — made sure I didn't slip!"

Years of mismanagement created a nightmare for borrowers

To appreciate the excitement — and relief — of thousands of public service borrowers, you have to understand how a program that was meant to do so much good ended up causing so much pain.

The Public Service Loan Forgiveness program began in 2007 to encourage borrowers to work in public service. But the rules were strict and badly communicated by the Education Department to the companies that manage student loans. Those companies then spent years mismanaging the program and misinforming borrowers.

Victoria Chamberlin served in the U.S. Army for several years. Now, new changes to the Public Service Loan Forgiveness program should help erase her $70,000 in student debts, which, she says, would be "unbelievable. We never thought it would be possible."
/ Amanda Andrade-Rhoades for NPR
Victoria Chamberlin served in the U.S. Army for several years. Now, new changes to the Public Service Loan Forgiveness program should help erase her $70,000 in student debts, which, she says, would be "unbelievable. We never thought it would be possible."

"I don't have a heartbreaking case where I was in the wrong repayment plan or my payment was off by a penny. I did everything exactly right," says Chamberlin, who nevertheless ran afoul of the program after she and her husband enlisted in the Army.

Several times, when the couple attempted to recertify their incomes, as the program regularly requires, Chamberlin says the company managing their loans erroneously increased their monthly payments.

"And then we would have to go into forbearance while they figured it out," Chamberlin remembers, "because we were both active duty and couldn't afford [the higher payments]."

This constant back-and-forth — getting the payments corrected, then restarted — was exhausting, Chamberlin says, especially having to do it from military bases in Germany and South Korea.

"I'd have to go to the base and use the secure phone that you can call the States with but that you're not supposed to use for personal reasons," Chamberlin remembers. "It's just been awful."

The new waivers could transform borrowers' financial futures

These stories of PSLF mistakes are legion — and a big reason the Education Department is giving borrowers retroactive waivers from some of the program's toughest rules.

Borrowers who were disqualified for being in the wrong repayment plan, for example, or for having the wrong kind of loan can now get credit for past payments. In fact, in an email on Friday, the department notified Chamberlin that she should get credit for at least 11 months she spent paying down the wrong kind of loan. According to the details of the overhaul, she should also get credit for the months her payments were paused while she was on active duty.

Chamberlin now works for a private company, but she says she served more than enough time to qualify for forgiveness. "It sounds dramatic, but if my loans can actually get forgiven, then I won't have to leave the job that I really like."

Zahra Nealy is nine months from having half her student loan debts erased under the Public Service Loan Forgiveness program. Now, because of changes to the program, she could be completely free of student debt within a year.
/ Roxanne Turpen for NPR
Zahra Nealy is nine months from having half her student loan debts erased under the Public Service Loan Forgiveness program. Now, because of changes to the program, she could be completely free of student debt within a year.

Zahra Nealy has spent nearly a decade working for nonprofits in Southern California, and like Chamberlin, she also had a paperwork problem. But she is now back on track.

"I am nine payments away from being eligible for loan forgiveness," says Nealy. That means she has made 111 eligible on-time payments and is now less than a year away from having some of her student debts erased. Some, because she has always had two kinds of loans. Half her debts qualify for PSLF; half don't. Roughly $140,000 in all.

But after the Education Department announced it was loosening its rules, Nealy learned that potentially all her loans could be eligible for forgiveness and could be erased within a year. "Which would be huge!" Nealy says, laughing with excitement.

She says that because of her debts, homeownership has felt unattainable. But soon, maybe not.

And this news has her feeling something she's not used to feeling about her student debts: "Hope," Nealy says. "It's really hope. In a desperate time."

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