Thousands of public service workers around the country are receiving welcome news for the holidays: the federal government is forgiving their student loan debt.
The development comes after they were initially rejected for a program intended to reward their chosen career path.
However, after the Biden administration announced a limited waiver period in October, many of those workers are now discovering they will get the relief.
Don’t blame Maija Meadows Hasegawa, a librarian at Boston’s North End branch, for feeling a little giddy since hearing the news.
“It is my best Christmas present,” Meadows Hasegawa told me. “When January rolls around, I don’t have to feel like I’m automatically writing another check.”
That outlook is dramatically different than when we first introduced you to Meadows Hasegawa two years ago.
At the time, she was working as a librarian at the Boston Public Library. Despite a decade on the job, and diligently making monthly student loan payments that entire time, Meadows Hasegawa learned she did not qualify for the Public Service Loan Forgiveness (PSLF) program.
Meadows Hasegawa recalled how the financial blow made her question whether she should’ve attained a master’s degree and pursued her dream job.
“It felt like I did all this work and just had all these loans saddled on me,” Meadows Hasegawa said. “I’m working in the field I really want, but it just feels like you are being punished for it.”
In theory, the PSLF program sounds so simple. If you work in a public service job, you need to make 120 qualifying loan payments, which is the equivalent to 10 years of paying off debt. After that, a borrower’s outstanding debt would be forgiven.
However, as we previously reported, Meadows Hasegawa and the vast majority of applicants were denied. At the time, the acceptance rate from the U.S. Department of Education was only hovering at 1%.
Many of the rejections resulted from technicalities like having the wrong type of federal loan or an ineligible type of payment plan.
The waiver announced by the federal government means that people who were disqualified will get a second review to see if they should’ve actually been approved.
“Thousands of borrowers are going to benefit,” said Adam Minsky, a Boston attorney who specializes in student loans. “We’re looking at possibly billions of dollars in relief, so it’s a huge deal.”
Minsky told me the review process should happen automatically, but if borrowers don’t want to leave anything to chance, they should go to studentaid.gov/pslf to make sure the government has all the correct details.
“Get some info on your loans and your employment. If you think you qualify, start working on the steps to get relief,” Minsky said. “It’s definitely worth it. And it’s not forever because you only have until October of next year to act.”
According to the U.S. Department of Education, the limited waiver immediately means 670 Massachusetts borrowers will receive about $42.8 million in loan forgiveness.
Nationwide, the waiver is estimated to help more than 550,000 borrowers see progress toward PSLF, with the average borrower receiving 23 additional payments.
For reference, only about 16,000 borrowers had previously received forgiveness under PSLF.
“The system has not delivered on the promise of the program to date, but that is about to change for many borrowers who have served their communities and their country,” U.S. Education Secretary Miguel Cardona said in a written statement.
Meadows Hasegawa has already received notification that her remaining student loan debt of about $40,000 will disappear. She even saw some refunds show up in her bank account for excess payments beyond the 120 she’d already made.
The financial relief suddenly frees up a big chunk of money every month as she and her husband raise their toddler.
“It’s something that makes us go into the New Year with new opportunities,” Meadows Hasegawa told me. “We have new dreams we can think of.”