Second Chance at Public Service Loan Forgiveness Act

To improve the public service loan forgiveness program under section 455(m) of the Higher Education Act of 1965, to improve loan forgiveness eligibility provisions under such Act for teachers, and for other purposes. 1. Short title This Act may be cited as the Second Chance at Public Service Loan Forgiveness Act 2. Findings Congress finds the following: (1) The public service loan forgiveness program under section 455(m) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(m) 20 U.S.C. 1071 et seq. 20 U.S.C. 1087a et seq. (2) These public service careers, which include employment in military, emergency management, government, public safety, law enforcement, public health, education, child care, social work, services for individuals with disabilities, services for the elderly, public interest legal services, and library sciences, pay substantially less than similar careers in the private sector. (3) The public sector also repeatedly experiences workforce shortages, especially following the COVID–19 pandemic. (4) An undergraduate degree, certification, or advanced degree is a prerequisite to enter or advance in these public service careers. Yet, research suggests that the prospect of several decades of student loan payments often deters individuals from pursuing careers in public service. (5) The public service loan forgiveness program has substantially failed. In 2018, 99 percent of the borrowers who applied for relief under the program were denied due to improper type of loans, employment, or repayment plan, or the number of payments that they had made. (6) Advocates and enforcement agencies, including 38 State Attorneys General and the Bureau of Consumer Financial Protection, have repeatedly found that all of the major Federal student loan servicers provided inaccurate information to borrowers who were interested in or relying upon the public service loan forgiveness program. They also found that servicers repeatedly steered borrowers away from public service loan forgiveness into higher monthly payments and into deferment and forbearances. (7) This has caused millions of public servants irreparable economic harm, including preventing them from buying a home, opening a small business, starting a family, or retiring, because of their student debt. (8) Despite the recent actions of President Biden's administration to improve the public service loan forgiveness program, these actions are limited and will not fully atone for the repeated, pervasive, and systemic actions by Federal student loan servicers to prevent public servants from fully benefitting from this program. 3. Making forgiveness attainable for public sector workers Section 455(m) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(m) (1) by striking paragraph (1) and inserting the following: (1) In general The Secretary shall cancel the balance of interest and principal due, in accordance with paragraph (2), on any eligible Federal Direct Loan not in default for a borrower who— (A) obtained an eligible Federal Direct Loan on or after January 1, 1994; (B) has been employed full-time in public service for a total period of 10 years or more after the date on which the first eligible Federal Direct Loan was obtained; and (C) while employed full-time in public service during the period described in subparagraph (B), completes 120 monthly payments on the eligible loans of the borrower, pursuant to any one or a combination of the following: (i) Payments under an income-based repayment plan under section 493C. (ii) Payments under a standard repayment plan under subsection (d)(1)(A), based on a 10-year repayment period. (iii) Monthly payments under a repayment plan under subsection (d)(1) or (g) of not less than the monthly amount calculated under subsection (d)(1)(A), based on a 10-year repayment period. (iv) Payments under an income contingent repayment plan under subsection (d)(1)(D). (v) Any monthly payment that would have otherwise been made by the borrower on 1 or more eligible loans during a period of forbearance, including— (I) discretionary or mandatory administrative forbearance; (II) forbearance described in section 428(c)(3)(A)(i), including forbearance because— (aa) the borrower is serving in a medical or dental internship or residency program described in section 428(c)(3)(A)(i)(I); (bb) the borrower is serving in a national service position for which the borrower receives a national service educational award under the National and Community Service Trust Act of 1993 ( 42 U.S.C. 12501 et seq. (cc) the borrower is eligible for interest payments to be made on such loan for service in the Armed Forces under section 2174 of title 10, United States Code, and, pursuant to that eligibility, the interest is being paid on such loan under subsection (o); (III) forbearance provided because the borrower is serving in an educator residency program; and (IV) forbearance provided to a borrower due to the borrower's qualifying National Guard service. (vi) Any monthly payment that would have otherwise been made by the borrower on 1 or more eligible loans during a period of deferment, including— (I) deferment relating to cancer treatment under subsection (f)(3) or section 427(a)(2)(C)(v); (II) deferment relating to active duty during a war or other military operation or national emergency, or performing qualifying National Guard duty during a war or other military operation or national emergency, under subsection (f)(2)(C) or section 428(b)(1)(M)(iii); (III) deferment relating to a period of unemployment under subsection (f)(2)(B) or section 428(b)(1)(M)(ii), or of economic hardship under subsection (f)(2)(D) or section 428(b)(1)(M)(iv); (IV) deferment provided in connection with services in the Peace Corps; and (V) deferment provided— (aa) while the borrower is carrying at least one-half the normal full-time work load under subsection (f)(2)(A) or section 427(a)(2)(C) and employed full-time in public service; or (bb) in connection with a graduate student fellowship or while employed by a qualifying employer and pursuing a graduate, professional, or certificate program or in connection with a rehabilitation training program under subsection (f)(2)(A) or section 427(a)(2)(C). (vii) Any monthly payment that otherwise would have been made by the borrower during a grace period lasting in excess of 6 consecutive months. ; (2) by redesignating paragraphs (3) and (4) as paragraphs (6) and (7), respectively; (3) by inserting after paragraph (2) the following: (3) Special rules relating to employment (A) Grace period public service employment The Secretary shall include any payments made by a borrower on an eligible Federal Direct Loan during a 6-month grace period, as described in section 428(b)(7)(A), while the borrower was employed full-time in public service, upon notification by the borrower of such employment and payments made. (B) AmeriCorps and Peace Corps service For purposes of this subsection, volunteer service as an AmeriCorps or Peace Corps volunteer, as described in subclause (III) or (IV) of paragraph (6)(C)(i), shall be deemed to be employment. . (4) Special rule for certain loans and borrowers (A) Parent Plus loans In the case of a borrower of an eligible Federal Direct Loan that is on behalf of a student, any public service employment required under this subsection may be completed by the borrower or by the student on whose behalf the loan was made. (B) Special rules for Federal Direct Consolidation loans (i) In general A borrower who has obtained an eligible Federal Direct Loan that is a Federal Direct Consolidation Loan that includes a loan made, insured, or guaranteed under part B or part E shall receive credit— (I) under paragraph (1) for any years of full-time employment in public service that occurred while the borrower had a component loan of the Federal Direct Consolidation Loan; and (II) under paragraph (1)(C) for any monthly payment described in such paragraph that was made by, or credited to, the borrower on a component loan of the Federal Direct Consolidation Loan. (ii) Special rules for joint borrowers The Secretary shall allow the borrowers of a Joint Consolidation Loan or a Joint Direct Consolidation Loan who are employed in a public service job to consolidate such loan into a Federal Direct Consolidation Loan in order to receive loan cancellation pursuant to this subsection. ; and (4) by striking paragraph (6), as redesignated by paragraph (2), and inserting the following: (6) Definitions In this subsection: (A) Eligible Federal direct loan The term eligible Federal Direct Loan (B) Full-time The term full-time (i) not less than 30 hours a week; (ii) in the case of any form of educational public service employment that is under a contract for not less than 8 months, not less than 30 hours per week during the contract period; or (iii) in the case of employment as an adjunct, contingent, or part-time faculty member, teacher, or lecturer who is paid solely for the credit hours taught at an institution of higher education, the equivalent of 30 hours per week determined by multiplying each credit or contract hour taught per week by 3.35. (C) Public service (i) In general The term public service (I) employment with a qualifying employer described in clause (i) or (ii) of subparagraph (D); (II) employment with a qualifying employer described in subparagraph (D)(iii) that— (aa) provides direct services to the public through its employees; and (bb) has devoted a majority of its full-time equivalent employees to working in not less than 1 of the following areas: (AA) Early childhood education programs. (BB) Emergency management. (CC) Law enforcement. (DD) Military service. (EE) Other school-based services. (FF) Public education (including higher education). (GG) Public health. (HH) Public interest law services. (II) Public library services. (JJ) Public safety. (KK) Public services for individuals with disabilities or public services for the elderly. (LL) School library services; (III) satisfactory service as a Peace Corps volunteer in accordance with section 5 of the Peace Corps Act ( 22 U.S.C. 2504 (IV) successful service as a participant in a position described in section 123 of the National and Community Service Act of 1990 ( 42 U.S.C. 12573 (ii) Additional definitions For purposes of clause (i): (I) Emergency management services The term emergency management services (II) Law enforcement The term law enforcement (III) Military service The term military service (IV) Other school-based services The term other school-based services (aa) Paraprofessional services, including paraeducator services. (bb) Clerical and administrative services. (cc) Transportation services. (dd) Food and nutrition services. (ee) Custodial and maintenance services. (ff) Security services. (gg) Health and student services. (hh) Technical services. (ii) Skilled trades. (V) Public education The term public education (aa) the provision of educational enrichment or support to students in a school or a school-like setting, including teaching; and (bb) teaching as a full-time faculty member at a Tribal College or University, as defined in section 316(b), and other faculty teaching in high-needs subject areas or areas of shortage (including nurse faculty, foreign language faculty, and part-time faculty at community colleges), as determined by the Secretary. (VI) The term public health (aa) services provided by physicians, nurses (including nurses in a clinical setting), and nurse practitioners; and (bb) services provided by health care practitioner occupations, health care support occupations, and counselors, social workers, and other community and social service specialist occupations, as those terms are defined by the Bureau of Labor Statistics. (VII) The term public interest law (VIII) The term public library services (IX) The term public safety services (X) The term public services for individuals with disabilities 42 U.S.C. 12102 (XI) The term public service for the elderly (XII) The term school library services (D) Qualifying employer The term qualifying employer (i) a Federal, State, Tribal, local, intergovernmental, or regional governmental organization, agency, or entity based or headquartered in the United States, including the Armed Forces, National Guard, Merchant Marines, or Coast Guard; (ii) a nonprofit organization that is qualified under section 501(c)(3) (iii) a nonprofit organization that is qualified under section 501(a) of such Code, with respect to an employee in public service employment. . 4. Loan forgiveness for teachers The Higher Education Act of 1965 ( 20 U.S.C. 1001 et seq. (1) in section 428J(g)(2) ( 20 U.S.C. 1078–10(g)(2) (A) in subparagraph (A), by inserting or (B) by striking subparagraph (B); and (C) by redesignating subparagraph (C) as subparagraph (B); (2) in paragraph (7) of section 455(m) ( 20 U.S.C. 1087e(m) both this subsection and section 428J, 428K, 428L, or 460 both this subsection and section 428K or 428L (3) in section 460(g)(2) ( 20 U.S.C. 1087j(g)(2) (A) in subparagraph (A), by inserting or (B) by striking subparagraph (B); and (C) by redesignating subparagraph (C) as subparagraph (B).

Summary: Second Chance at Public Service Loan Forgiveness Act This bill makes changes to the Public Service Loan Forgiveness (PSLF) program. Among other changes, the bill (1) allows a borrower who obtained an eligible Federal Direct Loan on or after January 1, 1994, to receive loan forgiveness under the PSLF program; (2) provides additional relevant definitions, including to specify that full-time employment is at least 30 hours a week; and (3) allows an eligible teacher to use the same teaching service to qualify for both the Teacher Loan Forgiveness program and the PSLF program.