Public Service Loan Forgiveness Payments Decrease for Some Borrowers

The U.S. Department of Education is reevaluating the account history of borrowers seeking Public Service Loan forgiveness, which in some cases will reduce the number of qualifying payments and move those individuals away from debt forgiveness.

Created in 2007, PSLF cancels federal student loans for government and nonprofit workers over 10 years or after 120 qualifying monthly payments. According to the Brookings Institution, about 1.2 million public employees have had their debts canceled under the program, with an average cleared balance of nearly $75,000.

Several posts on social media platforms appeared to document borrowers’ experiences, and one individual said in a Reddit comment that the number of payments had dropped from nearly 120 to nearly 94.

“We have some clients who have seen their PSLF numbers go down,” said Nancy Nearman, assistant director of the Education Debt Consumer Assistance Program in New York, a nonprofit that helps borrowers repay their loans.

“It’s alarming for people who rely on numbers reported by the government to find out through no fault of their own that those numbers are wrong,” Nierman added.

A Department of Education spokesperson said the department is correcting a “coding error” made by the Biden administration.

“These errors resulted in inaccurate payment counts for some borrowers,” a spokesperson told CNBC in an email. “The Department remains committed to ensuring that all eligible payments are properly credited to borrowers’ accounts.”

Longer student loan repayment schedules can force borrowers to postpone major life milestones like homeownership, marriage and starting a family, consumer advocates say. For many public servants, fewer payments also mean they have to stay in lower-paying jobs to remain eligible for PSLF.

Under the Biden administration, student loan borrowers were offered the opportunity to have their PSLF payments reconsidered by the Department of Education. You can also now get credit for some periods that didn’t previously count, such as during certain payment suspensions.

The review comes in the wake of a 2022 U.S. Government Accountability Office report that found that borrowers were not always properly accounted for their payments. The Consumer Financial Protection Bureau warned in 2015 that borrowers were being steered into unnecessarily expensive forbearances during which they accrued interest and had their credit for forgiveness suspended.

The Education Department did not respond to CNBC’s questions about what changes during the Biden administration led to the error.

Higher education expert Mark Kantrowitz said the government also hasn’t given student loan borrowers a reason for the change in the number of payments eligible for PSLF. That’s concerning, he said.

“Unless a specific explanation is given to the borrower, we cannot verify whether the changes were accurate,” Kantrowitz said.

Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers, said the adjusted payment numbers are not a result of the new PSLF policy.

“This was a purely technical accounting error,” Buchanan said, adding that other companies could also benefit from the correction.

“Some borrowers will see an increase in PSLF numbers,” he said.

If you lose eligible payments and feel it was a mistake, you can file a PSLF reconsideration request with the Department of Education, Nearman said.

To protect yourself from tracking errors, take a screenshot of the payment number in your Federal Student Aid account. Download your bank statements to maintain a personal record of all payments made, says Nearman.

To remain eligible for employment, a person must fill out a so-called employer certification form at least once a year, she added. Please also record these forms.

Has your PSLF payment frequency changed recently? If you’d like to share your story, email annie.nova@cnbc.com.