To Apply For Expiring Student Loan Forgiveness Opportunity, Borrowers May Have Less Time Than It Seems

As a key student loan forgiveness opportunity winds down, Biden administration officials are urging borrowers to apply before the deadline. But millions of borrowers may not realize that the window to apply might be even shorter than it seems.

Here’s what you need to know.

Expansion of Student Loan Forgiveness For Public Service Borrowers

Biden announced the “Limited PSLF Waiver” opportunity in October 2021, dramatically broadening access to Public Service Loan Forgiveness (PSLF) — a student loan forgiveness program that can eliminate the federal student loan debt for borrowers who commit to working 10 years or more for nonprofit or public organizations.

The initiative has seen some success, with Education Secretary Miguel Cardona touting over $8 billion in approved student loan forgiveness so far. But the Limited PSLF Waiver is scheduled set to end on October 31, 2022, which would revert the PSLF program to its original, stricter eligibility rules. Prior to the waiver, the PSLF program suffered from a dismal approval rate that never eclipsed three percent.

Top officials have been urging borrowers to apply for student loan forgiveness under the PSLF Waiver by the October 31 deadline. “Now through October 31, 2022, you may be able to receive credit for student loan payments that previously did not qualify for PSLF,” said the Education Department in one of several tweets last month advertising the program.

Time is Short to Apply for Student Loan Forgiveness Under the PSLF Waiver

The problem, however, is that some borrowers must take several steps to qualify for relief under the Limited PSLF Waiver. Borrowers with FFEL loans and Perkins loans can only qualify for relief under the waiver if they consolidate those loans through the federal Direct consolidation program. This process can take 30 to 60 days, and sometimes longer. Those borrowers must then submit PSLF Employment Certification forms to confirm their qualifying employment, which can also take some time since the borrower’s employer must sign the form. All of this must be done by the waiver deadline.

“Consolidate your FFEL Program loans and Perkins Loans into a Direct Consolidation Loan by Oct. 31, 2022. You can’t receive credit for time in repayment if you don’t consolidate and submit your PSLF form by that date,” says the Education Department in updated guidance published on its website.

With less than 90 days until October 31, time is rapidly running out for many borrowers to complete the required steps to qualify for the Limited PSLF Waiver, given that consolidation alone can take 60 days or more in some cases. Borrowers who must consolidate to qualify, but who wait until September or October to start the Direct consolidation application process, could wind up missing the boat on student loan forgiveness if the application processing drags into November. Once a Direct consolidation application has been submitted, it’s largely out of the borrower’s hands, and the processing timeline is up to the Education Department and its loan servicers.

Groups Urge Biden to Extend PSLF Waiver

Advocates for borrowers have been sounding the alarm for weeks on the expiring Limited PSLF Waiver and are urging Biden to extend it, arguing that potentially millions of borrowers may lose out on student loan forgiveness.

Last month, a coalition of over 130 civil rights, consumer protection, and labor organizations submitted a letter to President Biden, pushing him to extend the PSLF waiver opportunity.

“To ensure your administration’s policies have their intended effect, we urge you to extend the deadline for the PSLF waiver through at least 2023,” the groups wrote. An overhaul of the PSLF regulations is expected to go into effect in July 2023.

Last week, a group of 20 state attorneys general also wrote to Biden to convince him to extend the waiver.

“Given the essential benefits provided by the Limited PSLF Waiver, and the fact that fundamental problems with the PSLF Program will immediately return (likely in an exacerbated form) upon the waiver’s end, we have grave concerns about plans to end the waiver just two months after the federal student loan portfolio is scheduled to resume repayment and before the Department’s new PSLF regulations take effect,” wrote the group. “More than nine months into the waiver, many borrowers, particularly FFEL borrowers, remain understandably confused… Ending the waiver on October 31, 2022 would provide only two months for borrowers to take the critical steps necessary to receive waiver benefits.”

Biden to Decide On Key Student Loan Relief Initiatives Soon, Including the Student Loan Pause

So far, Biden officials have not given any indication that an extension of the Limited PSLF Waiver is under consideration.

But the Biden administration must decide on how to address a number of student loan relief initiatives in the coming days and weeks. The ongoing student loan pause is set to end on August 31, and an IDR Account Adjustment designed to advance borrowers’ progress towards student loan forgiveness under repayment programs tied to their incomes has not yet been implemented.

Meanwhile, Biden has indicated that he will make a decision on whether to enact wide-scale student loan forgiveness by the end of the month, as well.

Further Student Loan Reading

Did The Biden Administration Just Drop A Big Hint On Student Loan Forgiveness?

Do You Qualify For Student Loan Forgiveness? Education Department Launches New Tool To Help Borrowers Find Out

Biden May Extend Student Loan Pause Into Next Year And Is Considering Other Relief, Including Loan Forgiveness

If You Went To These Schools, You May Qualify For Student Loan Forgiveness: Here’s What To Do