A temporary waiver for the Public Service Loan Forgiveness (PSLF) program has provided over $10 billion in student loan forgiveness for hundreds of thousands of borrowers. But the initiative is set to end in only two weeks, so time is running out to apply.
Here’s what you need to know if you’re thinking about applying for student loan forgiveness under this expiring initiative.
Student Loan Forgiveness Through PSLF Waiver Ends On October 31
Public Service Loan Forgiveness (PSLF) is a federal student loan forgiveness program. First established in October 2007, PSLF can eliminate the federal student loan debt for borrowers who commit to working for nonprofit or government organizations for 10 years or longer.
Under the original PSLF regulations, borrowers needed 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-driven repayment plan or 10-year Standard plan would qualify. Payments made on the “wrong” kind of federal student loan or under the “wrong” repayment plan wouldn’t count.
The complicated eligibility rules, and poor administering of the program by the government and its contractors, resulted in high denial rates. To address these shortcomings, last year the Biden administration created the Limited PSLF Waiver.
Under the waiver initiative, the Education Department is able to go back and credit many loan periods towards a borrower’s 120 qualifying payments that, under the original PSLF rules, could not have counted. This includes any past period of repayment on any type of federal student loan (including FFELP loans, which don’t qualify under the original PSLF rules) as well as certain periods of deferment and forbearance.
But the benefits of the Limited PSLF Waiver are only temporary, and they end in two weeks. The waiver initiative is set to sunset on October 31. That means that when November 1 hits, the PSLF program reverts back to the original framework, where only payments made on Direct loans under qualifying repayment plans will count.
While some of the relief under the Limited PSLF Waiver will be provided automatically, many other borrowers still need to take steps to qualify. Education Department officials are urging borrowers to apply.
How To Get Student Loan Forgiveness Through the PSLF Waiver
Whether a borrower must take steps to benefit from the Limited PSLF Waiver 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 Education Department will automatically adjust borrowers’ PSLF payment counts in accordance with the Limited PSLF Waiver guidelines, even after the October 31 deadline has passed.
Borrowers with FFELP loans would need to consolidate those loans via the federal Direct consolidation program for those loans to get PSLF credit under the waiver. In addition, borrowers with many different individual student loans (Direct or FFELP) that have different PSLF payment counts can also consider Direct loan consolidation to maximize PSLF credit under the waiver. While the Direct consolidation process can take 30 to 60 days, the Education Department indicates that borrowers who submit their Direct loan consolidation application through the StudentAid.gov website by October 31 will be considered timely, even if the application is processed after this date.
Finally, both Direct and FFELP borrowers who have not certified all of their public service employment should complete and submit PSLF Employment Certification forms before the October 31 deadline. The Education Department can consider qualifying employment as far back as October 2007. The Education Department recommends that borrowers use the online PSLF Help Tool to generate their PSLF forms, as the department will maintain a record of the steps that the borrower took online prior to October 31.
The Education Department has published detailed guidance on the Limited PSLF Waiver application process, including instructions on how and where to submit the PSLF Employment Certification forms to be considered timely. Borrowers should carefully review this guidance.
PSLF Waiver Is Distinct From Biden’s One-Time Student Loan Forgiveness Program, and FFELP Loans Can Qualify
The Limited PSLF Waiver is a completely different loan forgiveness program from the new one-time student loan cancellation program currently dominating the news. That program can provide up to $20,000 in student loan forgiveness for qualifying borrowers (student loan forgiveness through PSLF, however, is not capped).
While FFELP loans are excluded from relief under the one-time cancellation initiative as of September 29, FFELP loans can still potentially qualify for loan forgiveness under the Limited PSLF Waiver, provided that the borrower consolidates and submits their employment certification form by the October 31 deadline.
Importantly, the Limited PSLF Waiver and the one-time cancellation program are not mutually exclusive. You can apply for both. Borrowers should be mindful, however, 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 initiated a beta launch of the application for one-time student loan forgiveness, and borrowers will have until December 31, 2023 to apply. You can review detailed guidance on the one-time cancellation initiative here.