Waivers for the public service loan forgiveness program: Who could benefit from take-up?

Abstract

For workers employed in the public and nonprofit sectors, the Public Service Loan Forgiveness (PSLF) program offers the potential for full forgiveness of federal student loans for those with 10 years of full-time work experience. A year-long waiver issued by the Department of Education in 2021 to address administrative problems in program access provided a new path to PSLF relief for many borrowers. We explore the overall impact and distributional implications of potential full participation in loan forgiveness enabled by the PSLF waiver program using the 2018 Survey of Income and Program Participation (SIPP). Our estimates identify more than $100 billion in loan forgiveness available to as many as 3.45 million borrowers through the PSLF waiver program. Potential beneficiaries of this initiative are disproportionately employed in occupations like teaching and health care. Full take-up of the PSLF waiver would lead to a narrowing of the racial gap in student debt burden. However, the distributional impact of the PSLF waiver depends critically on the take-up rate and there is some evidence that those borrowers with relatively high income or advanced degrees have been most likely to access benefits.