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Public Service Loan Forgiveness Program will be revamped in a few weeks, White House says

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WASHINGTON - Major changes are coming for one of the federal government's most maligned student loan programs, and they could erase the debt of thousands of school teachers, military members and government workers. 

White House press secretary Jen Psaki said in a news briefing Monday that the changes to the Public Service Loan Forgiveness Program would be coming in a few weeks.

"Fixing this program has been a priority for this administration from the first day," she said. 

The changes mark the federal government’s latest efforts to right the ship for the federal loan forgiveness program that was meant to incentivize working in the public sector, but, in reality, has generated consternation among many borrowers. The revamp also comes at a time when the government has paused payments and interest on federal student loans through Jan. 31. 

Foremost among the complaints: Most who have applied for forgiveness have been turned away.

To qualify for Public Service Loan Forgiveness, borrowers must work in a job the government deems public service, and they have to make 120 payments via an income-based repayment plan. What’s more, only borrowers with loans made by the federal government, known as direct loans, qualify for relief. 

Of the roughly 168,000 people who applied from November to April, only 2% qualified for relief, according to the federal government’s data.

Psaki said the changes are coming via a series of executive actions. The scope of the changes wasn't immediately clear, but Psaki said that past payments by borrowers would be made eligible for forgiveness, "regardless of the loan program in which the payments were made." 

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That would be significant, given many borrowers have been turned away because they had non-qualifying loans or weren't in an income-based repayment program.

The Education Department said it would offer more details about the changes in the coming days. 

The Public Service Loan Forgiveness has been under intense scrutiny in recent weeks. CBS' news program, 60 Minutes, recently reported on military veterans who had applied for forgiveness through a program but were denied. 

What's more, the Student Borrower Protection Center, an advocacy group focused on student loan borrowers, and two of the nation’s largest teachers unions, the American Federation of Teachers and the National Education Association, also released a slew of documents obtained via a record request that they say further show the programs’ dysfunction. 

The Student Borrower Protection Center said specifically the federal government and FedLoan, the loan servicer that manages Public Service programs, denied thousands of borrowers access to loan forgiveness, "due to paperwork hurdles and other trivial administrative errors."