Public Service Loan Forgiveness: limited waiver opportunity
By Saki Kurose | Student Loan PlanningPublic Service Loan Forgiveness (PSLF) is a loan forgiveness program offered by the government for borrowers who work for a U.S. federal, state, local, or tribal government or not-for-profit organization. Under PSLF, public service workers can get their federal student loan balance forgiven after making 120 qualifying payments while working for a qualifying employer.
The program has been plagued with issues. Many borrowers who should have qualified have not gotten their loans forgiven for reasons such as being on the wrong repayment plan, payments not being counted for unreasonable reasons, or borrowers provided with wrong information by their loan servicers.
Last month, the Department of Education announced a major change to the program that could fix some of these issues: it will “implement a Limited PSLF Waiver to count all prior payments made by student borrowers toward PSLF, regardless of loan program.”
Here’s a summary of what it means and what you have to do if you qualify.
What is the limited PSLF waiver?For a limited time, between now and October 31, 2022, borrowers may be able to receive credit for past payments made on loans that would otherwise not qualify for PSLF. The employment requirements have not been changed. To qualify, borrowers must be employed full-time by the government, 501(c)(3) not-for-profit, or other not-for-profit organization that provides a qualifying service.
Who qualifies for the waiver?
- borrowers with Direct Loans
- those who have already consolidated into the Direct Loan program
- those with other types of federal student loans who submit a Direct consolidation application while the waiver is in effect
- students only (no parent borrowers)
Who benefits?Students who made payments while working for qualifying employers but the loans were previously determined to be disqualified (ex: had FFEL loans instead of Direct Loans or was a wrong repayment plan like Extended Repayment instead of an IDR plan)
Who does NOT benefit?
- already refinanced to a private loan
- already paid loans off
- Parent PLUS loan borrowers (will not become eligible even if consolidated before October 31, 2022)
Do this before October 31, 2022October 31, 2022 is the deadline to qualify for the limited PSLF waiver.
Make sure to:
- consolidate into the Direct Loan Program if you need to (borrowers with older FFEL loans from before 2010 should)
- submit a PSLF form
What payments will count?
-payments made after October 1, 2007 (when the PSLF program was started) and on or before October 31, 2021
What to expect
Automatic adjustments will be made:
- When/if you have consolidated your loans into the Direct Loan Program and submitted the PSLF form, you will see automatic adjustments in your account.
If you’ve already done all the above steps:
- You don’t need to do anything until you receive an update/communication from Student Aid
If you have Direct Loans but haven’t applied for PSLF:
- Submit a PSLF form to see if your current or past employers qualify for PSLF by October 31, 2022 (don’t wait- expect delays)
If you have FFEL loans or Perkins loans:
- submit a consolidation application to get the loan into Direct Loan program
- submit PSLF form by October 31, 2022
Don’t know what types of loans you have?
- log into your studentaid.gov account, My Aid and see your Loan Breakdown section
- ”FFEL” (Federal Family Education Loans) or “Perkins” must be consolidated (it becomes a Direct Consolidation loan afterwards) to qualify for this Waiver
As always, if you are not sure what to do, book a free introductory call with a student loan expert to make sure you don’t miss this opportunity!