While on the clock at her nonprofit hospital job this past July, Gabrielle Permanente logged into her student-loan account and saw nearly $200,000 in debt — a financial burden that cost more than her mortgage each month — wiped clean.
“I still don’t believe it’s real,” says Permanente, 35, an anesthesiologist assistant at Moffitt Cancer Center in Tampa, Fla. “I’m so paranoid that they’re going to take it back.”
That’s because it almost didn’t happen. For years, Public Service Loan Forgiveness was all but impossible to get approved for — and that’s if you even knew about the poorly marketed program. First passed in 2007 and designed to encourage people to work for nonprofits or the government, PSLF offers student-loan forgiveness to people who’ve spent a decade repaying their debt while working for a nonprofit or government employer, but uptake for years had been dismal.
Then, in October 2021, the Biden administration made reforms to the program that shifted the needle for hundreds of thousands of borrowers like Permanente. Since then, with a streamlined application process and far more flexibility to receive credits for past payments, more than 700,000 public service workers have had nearly $51 billion in student debt erased, compared with fewer than 10,000 before 2021.
But advocates say that’s just a start. As of 2022, fewer than 15 percent of the estimated 9 million workers eligible for PSLF have filed the paperwork necessary to apply. That means millions of workers have yet to take advantage of a program that could free them from an average of nearly $100,000 in debt.
“This is a story of government working — we don’t get those very often,” says Mike Pierce, executive director of the Student Borrower Protection Center, an advocacy group.
The premise of PSLF was simple: Spend 10 years working for a qualifying employer — that is, a nonprofit or government — while paying off your student loans each month for a total of 120 repayments, and the government will forgive the rest.
Nearly two-thirds of nonprofit workers have a bachelor’s degree or higher — many more than the general population — but often earn less than their for-profit counterparts. The idea behind PSLF was that those workers, plus government employees like teachers or military personnel, would have their debt forgiven as a thank-you for their service.
If the legislation enacted in 2007 had worked as planned, hundreds of thousands of nurses, firefighters, and nonprofit workers could have been debt-free by 2017. Instead, of the nearly 30,000 people who applied for Public Service Loan Forgiveness in its first decade, only 96 people were released from their debt, a rejection rate of more than 99 percent before Biden’s reforms.
The reforms were just part of several attempts by the Biden administration to reduce the country’s $1.8 trillion in student-loan debt, including an extended pause on repayments that ended in October. While the Supreme Court struck down Biden’s most ambitious plan to cancel more than $400 billion in student debt this June, more modest executive actions, like the reforms to PSLF, have continued to quietly transform borrowers’ lives.
A Bureaucratic Labyrinth
Rachel Hurst first came across PSLF around 2010, while “wishfully” Googling loan-forgiveness options. A lifelong nonprofit organizer-turned-fundraiser, she was hoping for a way out of lingering student debt from her two degrees.
A labyrinth of bureaucratic requirements stood in her way. She’d find herself on the wrong repayment plan, with the wrong employee classification, or with the wrong kind of loan. She’d file fruitless complaints with the Consumer Financial Protection Bureau’s student-loan watchdog. Several years’ worth of her payments didn’t count toward the 120 she needed because they were made under the wrong repayment plan.
“I called, I read, I asked questions,” says Hurst, now 49. “I became my own advocate.”
Eventually, it worked. In May 2020, with the help of her state’s attorney general, she had nearly $40,000 of her remaining debt erased. With her newfound financial freedom, she bought her first home, with a yard for her dog to play. It was a long time coming.
“There was a piece of me that thought maybe it would never happen,” says Hurst. “Many people would have given up.”
In fact, many people did. Public Service Loan Forgiveness quickly gained a reputation among potential beneficiaries as an impossibly bureaucratic process — one that often wasn’t worth the effort required to apply. It’s a misconception that advocates say has followed the program despite new reforms.
In October 2021, the Biden administration announced a limited-time waiver that allowed borrowers to consolidate their loans and receive credit for past payments that didn’t previously qualify for PSLF. Many of the waiver’s provisions, plus a streamlined online application tool, became permanent in 2022.
Without that waiver, Permanente would still be paying off her six-figure loans, which came from the master’s degree she needed to become a certified anesthesiologist assistant.
In 2012, she accepted her first job at a nonprofit hospital that advertised PSLF as a built-in perk for its employees — one that wealthier for-profit hospitals couldn’t offer. Eager to get on track for the program, she requested that her student-loan servicer put her on a qualifying repayment plan.
Yet three years and thousands of dollars in repayments later, the same servicer told her that she was on the wrong plan — and had the wrong loan type — for PSLF. None of her repayments would count toward the 120 she needed for forgiveness. She would need to start all over again.
“I felt misled,” says Permanente. “Every time you called, it was different information.”
It was the 2021 waiver that ultimately allowed Permanente to receive credit for the 44 repayments she had made under the incorrect plan — and put her on track for forgiveness.
Reforms Create Pathway
Though hundreds of thousands of workers have benefited from PSLF since Biden’s reforms came into effect, that’s still only a fraction of those who might ultimately qualify. Around one in four Americans works for a nonprofit or government employer.
The trouble is getting the word out — to both employers and borrowers.
“We’ve seen over the years that people just don’t know about it,” says Tiffany Gourley Carter, policy counsel at the National Council of Nonprofits. “There’s an education gap that we’re still trying to close.”
Plus, while new reforms and resources have made PSLF far more accessible for more workers, the process still isn’t easy to understand, says Gourley Carter. That’s stood in the way of nonprofits taking full advantage of a free perk to attract more employees at a time when many are facing massive labor shortages.
“This is one way that we are able to compete” with for-profit employers, she says.“ The more employers who know about it and the more nonprofit employees who take advantage of it, the better it is for the sector.”
Lingering Trust Issues
Many others already know about PSLF but still harbor “trust issues” from a decade of mismanagement, says Dan Collier, an assistant professor at the University of Memphis who’s conducting an ongoing survey of 2,400 people who’ve received or are in the process of applying for PSLF.
“We don’t have the appetite to kill student-loan debt outright here, and we’re not going to,” says Collier, who called PSLF one of the most generous stopgaps available. “We just need it to work the way it was intended to work.”
One way that borrowers today are navigating the system’s complexities is by connecting with one another on social media. Three years after her own loans were forgiven, Hurst is now an admin for a PSLF Facebook group that boasts over 170,000 members.
“We’re nonprofit workers because we want to change the world,” says Hurst. “Sometimes that means starting within your own sphere.”
She and other veteran group members have helped fellow borrowers secure around $500 million in forgiveness this year alone, up from around $500,000 in earlier years. She urges newer applicants to continuously advocate for themselves, carefully document their repayments, and not wait to check their loan status: Some fixes for older loans are set to expire at the end of this year.
“You’ve committed to public service. You’ve served your community,” she tells them. “It’s not a giveaway. It’s something that you’ve earned.”