More Americans in public service positions may soon see their student debt disappear. The U.S. Department of Education announced Wednesday that 100,000 borrowers with approximately $6.2 billion in combined student loan debt have been identified for relief under the Public Service Loan Repayment Waiver until now.
While it may not have delivered on all the promises made during the campaign trail, President Joe Biden’s administration has made progress in forgiving student loans. Since revamping its PSLF program in October last year, 70,000 borrowers have had their student loans forgiven to the tune of nearly $5 billion this past January. These figures exceed those of the Ministry of Education initial estimate of 22,000 borrowers and a combined debt of $1.7 billion. With this latest announcement, around 30,000 more people have been deemed eligible for loan forgiveness.
Eligible borrowers will be notified as they go along, an Education Department spokesperson confirmed. The initiative to help these borrowers qualify for student debt forgiveness began in October last year when changes were made to the PSLF program to provide more debt relief to a more large number of Americans.
“Borrowers who dedicate a decade of their life to public service should be able to rely on the promise of public service loan forgiveness. The system has not delivered on this promise to date, but that is about to change. for many borrowers who have served their communities and their country,” U.S. Secretary of Education Miguel Cardona said in a statement at the time.
Are you now eligible for this expanded student loan forgiveness program? And if so, how to apply? Here’s everything you need to know about the PSLF.
What is the PSLF program and what changes have been made?
The PSLF program, first launched in 2007, was designed to help civil servants repay their loans faster. The program works by providing loan forgiveness to eligible government officials who have made 120 eligible student loan payments. Again nearly 99% of borrowers who applied since 2008 were denied before the October expansion.
Under the new Limited PSF Waiver program, the Department of Education is making it easier for borrowers to enroll and receive program benefits. These include making it easier to identify and deal with potential errors made by their loan servicers – and expanding the types of loans that will now be eligible for the forgiveness. Another focus will be on improving benefits for service members, including converting time spent on active duty into loan repayment, the department said.
Some restrictions are temporarily relaxed, offering new categories of borrowers the opportunity to receive a discount through loan consolidation. Previously, only direct federal loans were eligible for the PSLF. Now other federal loans like FFEL, federally guaranteed loans made through private lenders, Perkins loans, and those with non-standard or non-income-tested repayment plans may qualify. (Note: the exemption only applies to federal loans – although these make up the vast majority of student loan debt, accounting for more than 90% of the total.)
Borrowers can also receive credit for past payments and periods of employment, such as active military service, for which they would not have qualified in the past.
the limited derogation gives borrowers a full year to apply for the PSLF program under its new terms and greatly expands eligibility. Prior to last week’s announcement, there were limited options for appealing a denial of a PSLF request, and only 5% of people who applied because PSLF has never benefited from debt forgiveness.
Who is eligible for the PSLF?
To qualify for the PSLF, you must be employed full-time by a U.S. federal, state, local, or tribal government agency—this includes the military—or nonprofit organization. You must have direct loans or other types of federally guaranteed loans that have already been consolidated into direct loans, and you must make 120 qualifying payments (10 years of payments). Examples of eligible borrowers for the PSLF are workers like teachers, nurses, and firefighters who serve their local communities.
Who can claim additional debt forgiveness under the new PSLF conditions?
The PSLF has expanded borrower eligibility in the sense that more loan types and payment plans are eligible for the forgiveness than ever before, but the borrowers who can apply are still limited to public sector workers. Thus, more than 550,000 borrowers already eligible for the PSLF can now benefit from an additional discount. There are several specific ways to meet the requirements and check if you are eligible.
The easiest way to determine if you qualify is to apply for the Limited Waiver. Completing the waiver will help you do things like consolidate different types of loans or certify previous periods of employment for credit.
And even if you suspended your monthly student loan payments during the pandemic, you are still eligible for additional relief from the PSLF. In fact, each suspended payment still counts as an eligible payment toward your goal. So if your payments have been suspended for 22 months, that counts as 22 on-time payments.
How do I apply for a PSLF pardon?
The Ministry of Education has a dedicated tool to guide you in your request for a limited exemption. The deadline to apply for the waiver is October 31, 2022, but the sooner you apply, the better. Some borrowers may not have to do anything to have their loan cancelled, but it’s a good idea to confirm your specific details.
What if I made payments but didn’t receive credit?
In the past, if you made payments but your loan servicer had incomplete or inaccurate records, you had to almost no recourse to counter their claims. Now, with the limited waiver, you can apply for forgiveness and have your payments count towards your debt and forgiveness.
What if I had taken out loans not eligible for the PSLF?
Previously, only direct loans with a standard or income-driven repayment plan were eligible for PSLF. However, for a limited time, you may be able to receive credit for past payments on federal loans that were not previously eligible for PSLF, regardless of your repayment plan. Borrowers with FFEL, Perkins and other federal loans may need to consolidate their loans through the Direct Consolidation Program by October 31, 2022.
What other policy changes should I know about?
The Ministry of Education said in its statement that it will continue to roll out and update its policies in the coming months as it attempts to get the PSLF program back on track.
Correction, January 25: This article previously stated that private loans would be eligible for student loan forgiveness under the new waiver. It was wrong. In addition to direct loans, only FFEL loans – which are federally backed, but often issued by private lenders – Perkins loans and other federal loans are eligible for the PSLF exemption.