The PSLF Waiver is Ending: What You Need to Know Now
Are you a public service employee who has student loan debt but never even looked into the Public Service Loan Forgiveness Program (PSLF) because you thought it was a “scam” or too good to be true? Are you unsure of where to even look to know how you qualify for PSLF? Are you one of the millions of student loan borrowers who were rejected for PSLF after making 120 payments because you were told you had the wrong loans or were in the wrong payment plan? Now is the time for you to take another look at the program, but you need to act quickly.
The PSLF waiver — that is, changes made to the program so more student loan borrowers qualify for loan forgiveness – ends October 31, 2022. Here are the details you need to know and the actions you must take to avoid missing out on the waiver’s benefits.
What is the Waiver?
In October 2021, the U.S. Department of Education put a temporary waiver in place for PSLF. The department made temporary changes to how past payments would be counted, and it allowed time for Federal Family Education Loan Program (FFEL or FFELP) loans to be consolidated into Federal Direct Loans so they may also qualify for PSLF. In addition, the department made more exceptions for some borrowers for forbearances and deferment periods to count towards for forgiveness. These changes mean that many borrowers will see an increase in their qualifying payments towards loan forgiveness or will reach the required 120 payments necessary for forgiveness.
Who Benefits from the Waiver?
If you started your college education before 2011, you might have loans through the (FFELP/FFEL) or have Perkins Loans. If you do, these loans normally are not qualifying loans for PSLF. To take advantage of the waiver’s changes, you must start the process of consolidating these loans to Federal Direct Loans to have your past payments on these loans count.
If you made any payments in the past that weren’t under a Federal Income Driven Repayment Plan or you had periods of forbearance, those payments and months in forbearance will be counted towards qualifying payments. Periods of deferment before 2013, or periods of economic hardship deferment on or after January 2013, will also count under the waiver.
Borrowers must have qualifying employment to be eligible for the waiver exceptions. A qualifying employer is a government agency, 501(c)(3) nonprofit or other not-for-profit public service organization,
What Actions Do I Need to Take?
If you work for a qualifying employer, are confident your federal student loans are Direct Loans, have an Income Driven Repayment Plan, and have already turned in a PSLF application form in the past year, you do not need to take any action at this time.
If you work for a qualifying employer but none of the other criteria in the above paragraph apply, you must complete a PSLF Application Form, have your human resources (HR) department sign it and submit it to MOHELA Loan Servicing by October 31, 2022. You must complete a separate PSLF Application Form for your current qualifying employer and each previous qualifying employer. The HR department at each previous and current employer must complete the form, too.
As mentioned earlier, if you have federal loans other than Direct Loans (like an FFEL or Perkins Loan) you must start the consolidation process by October 31, 2022 for your past payments on these loans to qualify towards loan forgiveness. If you are not sure which type of loans you have you can check with your loan servicer or log in to the Federal Student Aid website.
The PSLF temporary waiver does not apply to Parent PLUS loan borrowers who work for public service organizations. These borrowers might want to consolidate their loans into Federal Direct Consolidation loans. This will qualify them for the Income Contingent Repayment Plan and work towards loan forgiveness.
What About the Student Loan Debt Relief Plan?
In addition to PSLF temporary waiver, the U.S. Department of Education also extended forbearance on student loan payments and accrual of loan interest once more – this time through December 31, 2022. In addition, the department is implementing targeted student loan forgiveness based on a borrower’s income, and it created a new plan to make loans more affordable for low- and middle-income borrowers.
While the targeted loan forgiveness will completely wipe out debts for some, others will still have loan payments starting again in 2023. With payments resuming, borrowers will need to assess whether they can afford payments. If they can’t, then they will need to look at repayment options such as an Income Driven Repayment Plan, additional forbearance or deferment.
LSS Financial Counseling is available to support student loan borrowers at no cost to them. Our experienced student loan counselors can answer questions about the temporary PSLF Waiver and provide support so borrowers understand the steps they need to take to qualify for PSLF. LSS Financial Counselors can also assist borrowers in looking holistically at their finances, including student loans, and in creating a loan repayment plan with them before forbearance ends.
I mentioned that some student loan borrowers believe forgiveness under PSLF is a scam and that their chances of loan forgiveness are slim. LSS Financial Counseling has worked with individuals to erase their entire student loan debt through PSLF, including Chris. Read his story here.
To schedule an appointment, call 888.577.2227, or learn more about our student loan counseling services.
Author Shannon Doyle is Program Director for Partnerships and Financial Education with LSS Financial Counseling.