The Department of Education reported this week that hundreds of thousands of student borrowers could soon benefit from a recent expansion of the Public Service Loan Forgiveness (PSLF), a key federal student loan forgiveness program.
“More than one million student borrowers could benefit from recent changes to the PSLF program. You are one of them,” Richard Cordray, chief operating officer of the Department of Education’s Federal Office of Student Aid, wrote in an email to borrowers this week.
Here is the latest.
Extension of Student Loan Forgiveness under PSLF Limited Exemption
The Public Service Loan Forgiveness (PSLF) allows borrowers to obtain student loan forgiveness after 10 years of employment for eligible nonprofit or public organizations. However, the original PSLF rules were complicated and onerous. Program requirements limit relief to borrowers who have specific types of federal student loans (direct program federal student loans) that must then be repaid under certain types of repayment plans (in most cases, a income-based repayment plan). Borrowers had to submit employment certification forms for their payments to be considered “eligible,” and many reported numerous issues with the certification process. The PSLF program in general suffered from poor administration and oversight, and rules and requirements were not always properly communicated to borrowers. The result was extremely low approval rates, which never exceeded 10 figures.
To address the shortcomings of the PSLF, the Biden administration announced a sweeping new and temporary initiative in October called the “Limited PSLF Waiver” program. Under the waiver, the Department of Education will count—for a limited time—repayment periods that otherwise would not have qualified for the PSLF, including payments made on non-direct federal loans (such as FFEL loans and Perkins loans), payments that were made under non-income-tested repayment plans, and payments that were not made in full or on time, while the borrower was employed eligible. According to the Department, so far more than 70,000 borrowers have already had their loans forgiven under the limited PSLF waiver, amounting to approximately $5 billion in total student loan forgiveness.
More Student Loan Forgiveness Comes Under Limited PSLF Exemption
So far, most of the relief given under the limited PSLF waiver has been given to borrowers who already met at least some of the main requirements of the original PSLF program – meaning they already have federal student loans. direct and had already certified their employment by submitting the appropriate PSLF application forms. Using information and data already present in the federal student aid system, Department of Education employees were able to automatically update a borrower’s PSLF payment count to credit borrowers with payments that would otherwise have been rejected under the pre-waiver rules. The result has been a recent wave of student loan cancellations.
But other borrowers who could benefit from the limited PSLF waiver must follow certain steps to be eligible. Borrowers who have FFEL loans and Perkins loans should consolidate those loans through the Federal Direct Consolidation Loans Program. And borrowers who have not certified their public service employment by completing and submitting the appropriate PSLF certification form should do so (and they must submit a separate form for each of their public service employers). Since this process takes time – 30-60 days on average to consolidate, and at least a similar (if not longer) timeframe for employment certification forms to be processed – many of these borrowers do not have yet received relief under the waiver, as it’s barely been four months since the initiative was first announced.
But the Department of Education expects hundreds of thousands of borrowers to soon benefit from the waiver scheme, both in the form of more eligible payments and an outright remission. of the loan for those who see a large enough adjustment. And officials expect that relief to start rolling out in the coming weeks.
“Beginning this month, many borrowers will begin to see updated payment counts,” Cordray wrote in the email to borrowers. “Federal Student Aid and your PSLF service work hard to monitor your accounts and make sure you get credit for your progress.”
Some borrowers have already started having problems accessing the PSLF waiver. Borrower complaints about misinformation, mishandling and long wait times for customer service calls have prompted at least one Biden official to warn student loan companies they could face ‘consequences’ for any unlawful conduct in the administration of the new expansion of student loan forgiveness.
Cordray sought to reassure borrowers in his explosive email. “The work is enormous,” he writes. “We have to do it in phases. Making all the adjustments may take a few months. Please let us focus on helping you. Give us time. Cordray implored borrowers “not to flood our phone lines,” an apparent reference to reports of hours-long wait times for borrowers trying to get information about the program.
Interested in student loan forgiveness through the PSLF waiver? Here are the next steps
The limited PSLF waiver is only in effect until October 31, 2022. And borrowers who must take certain steps to qualify — such as consolidating their FFEL and Perkins loans through the Federal Direct Consolidation Program, or submitting the forms PSLF employment certification required – will need to complete these tasks by this deadline.
The Department of Education has set up a detailed website where borrowers can get more information about the PSLF Limited Waiver Program, including the steps to apply. The website also has a helpful FAQ section where borrowers can get answers to common questions.
The Ministry of Education has also revamped its PSLF help tool, which can provide borrowers with initial information on whether or not they qualify for employment and to initiate the process of obtaining the required PSLF employment certification forms. .
Further Reading on Student Loans
Unraveling Student Loan Forgiveness: Who Qualifies for Three Complicated Programs for Public Service Workers
Is student loan forgiveness taxable in 2022? It is complicated.
Student Loan Forgiveness Updates: New Changes Coming in 2022 for Public Service Borrowers
Biden could ‘make a decision now’ on student loan forgiveness, says key senator