To apply for an expiring student loan forgiveness opportunity, borrowers may have less time than it seems

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

Here’s what you need to know.

Extension of student loan relief for public service borrowers

Biden announced the “Limited PSLF Waiver” opportunity in October 2021, dramatically expanding access to Public Service Loan Forgiveness (PSLF) – a student loan forgiveness program that can eliminate federal student loan debt. for borrowers who commit to working 10 years or more for a non-profit organization or public bodies.

The initiative has had some success, with Education Secretary Miguel Cardona boasting more than $8 billion in approved student loan forgiveness so far. But the limited PSLF waiver is scheduled to end on October 31, 2022, which would return the PSLF program to its original stricter eligibility rules. Before the waiver, the PSLF program suffered from a dismal approval rate that never exceeded 3%.

Senior officials have urged borrowers to apply for student loan forgiveness under the PSLF waiver before the Oct. 31 deadline. “Now until October 31, 2022, you may be able to receive credit for student loan repayments that were previously ineligible for PSLF,” the Education Department said in one of several tweets. of last month announcing the program.

Time is short to apply for student loan forgiveness under the PSLF waiver

The problem, however, is that some borrowers must follow multiple steps to qualify for relief under the limited PSLF waiver. Borrowers with FFEL loans and Perkins loans can only receive 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. These borrowers must then submit PSLF employment certification forms to confirm their qualifying employment, which may also take some time since the borrower’s employer must sign the form. All of this must be done before the waiver deadline.

“Consolidate your FFEL program loans and your Perkins loans into a direct consolidation loan by October 31, 2022. You cannot receive credit for repayment time if you do not consolidate and submit your PSLF form to this date,” says the Education Department of updated guidance posted on its website.

With less than 90 days until October 31, time is running out quickly for many borrowers to complete the steps required 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 begin the direct consolidation application process, could end up missing the boat on student loan forgiveness if application processing drags on in November. . Once a direct consolidation application has been submitted, it is largely out of the hands of the borrower and the processing time is up to the Department of Education and its loan officers.

Groups urge Biden to extend PSLF waiver

Borrower advocates have been sounding the alarm for weeks over the expiration of the limited PSLF waiver and urging Biden to extend it, arguing that potentially millions of borrowers could lose their student loan forgiveness.

Last month, a coalition of more than 130 civil rights, consumer protection and labor organizations submitted a letter to President Biden, urging him to extend the PSLF waiver option.

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

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

“Given the critical benefits provided by the limited PSLF waiver and the fact that fundamental issues with the PSLF program will immediately return (likely in exacerbated form) upon the end of the waiver, we have serious concerns about plans to put end to the waiver just two months after the resumption of repayment of the federal student loan portfolio and before the ministry’s new PSLF regulations come into effect,” the group wrote. “More than nine months after the start of the waiver, many borrowers, especially FFEL borrowers, understandably remain confused… Ending the waiver on October 31, 2022 would only give borrowers two months to take the essential steps necessary to receive the benefits of the waiver.”

Biden to decide on key student loan relief initiatives soon, including suspension of student loans

So far, Biden officials have given no indication that an extension of the limited PSLF waiver is under consideration.

But the Biden administration must decide how to handle a number of student loan relief initiatives in the days and weeks ahead. The ongoing student loan pause is set to end on August 31, and an IDR account adjustment designed to advance borrowers’ progress toward canceling student loans under income-related repayment programs has not yet been implemented.

Meanwhile, Biden has indicated he will also make a decision on whether to pass full-scale student loan forgiveness by the end of the month.

Further Reading on Student Loans

Did the Biden administration just drop a big hint on student loan forgiveness?

Are you eligible for student loan forgiveness? Education Department launches new tool to help borrowers find out

Biden could extend student loan pause through next year, considering further relief, including loan forgiveness

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