A temporary waiver of the Public Service Loan Forgiveness Program (PSLF) has provided more than $10 billion in student loan forgiveness to hundreds of thousands of borrowers. But the initiative is due to end in just two weeks, so time is running out to apply.
Here’s what you need to know if you’re considering applying for student loan forgiveness under this expiring initiative.
PSLF waiver of student loans ends October 31
The Public Service Loan Forgiveness (PSLF) is a federal student loan forgiveness program. Created in October 2007, the PSLF can eliminate federal student loan debt for borrowers who commit to working for nonprofit or government organizations for 10 years or more.
Under the original PSLF regulations, borrowers had to make 120 “qualifying payments” to become eligible for student loan forgiveness. But the definition of a “qualifying payment” was complicated — only payments made on direct federal student loans under an income-based repayment plan or a standard 10-year plan would qualify. Payments made on the “wrong” type of federal student loan or under the “wrong” repayment plan would not count.
Complicated eligibility rules and poor management of the program by the government and its contractors resulted in high rejection rates. To address these shortcomings, last year the Biden administration created the limited PSLF waiver.
Under the waiver initiative, the Department of Education is able to roll back and credit multiple loan periods for the 120 qualifying payments of a borrower who, under the original PSLF rules, n could not have counted. This includes any past repayment period on any type of federal student loan (including FFELP loans, which do not qualify under the original PSLF rules) as well as certain deferment and forbearance periods.
But the benefits of the limited PSLF waiver are only temporary and end in two weeks. The waiver initiative is due to end on October 31. This means that when November 1 rolls around, the PSLF program will revert to the original framework, where only payments made on direct loans under eligible repayment plans will be considered.
Although some relief under the limited PSLF waiver is granted automatically, many other borrowers still need to take steps to qualify. Ministry of Education officials are urging borrowers to apply.
How to Get Student Loan Forgiveness Through PSLF Waiver
Whether a borrower needs to take action to benefit from the limited PSLF relief depends on their circumstances.
Borrowers who have all direct federal student loans and have already submitted PSLF employment certification forms may not need to do anything at all. The Department of Education will automatically adjust the number of borrowers’ PSLF payments in accordance with the limited PSLF waiver guidelines, even after the October 31 deadline expires.
Borrowers with FFELP loans would need to consolidate those loans through the Federal Direct Consolidation Program for those loans to qualify for PSLF credit under the waiver. Additionally, borrowers with many different individual student loans (direct or FFELP) that have different numbers of PSLF payments may also consider direct loan consolidation to maximize PSLF credit under the waiver. While the Direct Consolidation process can take 30 to 60 days, the Department of Education advises that borrowers who submit their Direct Loan Consolidation application through the StudentAid.gov website before October 31 will be considered timely, even if the request is processed after this date.
Finally, direct and FFELP borrowers who have not certified all of their public service jobs must complete and submit PSLF employment certification forms by the October 31 deadline. The Ministry of Education may consider qualifying employment as early as October 2007. The Ministry of Education recommends that borrowers use the Online PSLF Help Tool to generate their PSLF forms, as the department will keep a record of the steps the borrower has taken online by October 31.
The Department of Education released detailed guidance on the PSLF limited waiver application process, including instructions on how and where to submit PSLF employment certification forms to be considered timely. Borrowers should read these guidelines carefully.
PSLF waiver is separate from Biden’s unique student loan forgiveness program, and FFELP loans may be eligible
The PSLF Limited Waiver is a completely different loan forgiveness program than the new, unique student loan forgiveness program that is dominating the news right now. This program can provide up to $20,000 in student loan forgiveness to eligible borrowers (student loan forgiveness through the PSLF, however, is not capped).
Although FFELP loans are excluded from relief under the Single Cancellation Initiative as of September 29, FFELP loans are still potentially eligible for loan forgiveness under the limited PSLF waiver, at provided the borrower consolidates and submits their employment certification form by the October 31 deadline. .
It is important to note that the limited PSLF waiver and the unique cancellation program are not mutually exclusive. You can apply for both. Borrowers should, however, keep in mind that consolidating FFELP loans with existing direct loans into a single direct consolidation loan based on an application submitted on or after September 29, 2022 could potentially make the entire consolidated balance ineligible for Biden’s one-time cancellation initiative, following changes to eligibility guidelines.
The Biden administration recently launched a beta launch of the Student Loan One-Time Forgiveness Application, and borrowers will have until December 31, 2023 to apply. You can consult detailed advice on the single cancellation initiative here.
Further Reading on Student Loan Forgiveness
Biden’s student loan forgiveness application is here – 5 tips before submitting
In Reversal, Biden Administration Announces New Student Loan Forgiveness Eligibility Limits
5 key takeaways from the sudden change in student loan forgiveness eligibility
Biden’s student loan forgiveness could be taxable in some states