Are you eligible for civil service loan forgiveness? Some 3.5 million federal student borrowers who work in the public service could qualify to repay their loans faster under a temporary expansion of the PSLF program. But the window to apply for it”limited PSLF waiver” closes.
The vast majority of borrowers who have applied for the PSLF have been denied assistance before, but new regulatory changes in October 2021 and again in april this year has made forgiveness more accessible to more public servants – teachers, civil servants, first responders and firefighters – who commit to working 10 years or more.
Waiver can provide a pathway to forgiveness retroactively. For example, it could allow some borrowers to count their previous payments towards the PSLF, giving them the opportunity to be reconsidered if they had already been refused, and allowing them to obtain credit on loan repayments, regardless of the plan.
The deadline to file a waiver request is October 31, but some borrowers need to act sooner. If you have qualifying Perkins or FFEL loans, you will first need to consolidate these into direct loans before applying. You should consolidate your loans “by the end of the first week of September, as the consolidation process can take 45 days,” according to Martin Lynch, director of education at Cambridge Credit Counseling Corp.
If you want to find out if you qualify for loan relief through the expanded PSLF program, keep reading. We’ll tell you how to apply on time and what else you need to know about civil service loan forgiveness. To find out more, here.
What is the PSLF program and am I eligible?
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. Yet, prior to the program’s expansion last October, the approval rating was horrendous: Nearly 99% of borrowers who applied since 2008 have been refused.
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 Federal Direct Loans or other types of federally guaranteed loans that have already been consolidated into Direct Loans and you must make 120 qualifying payments or 10 years of payments. Examples of borrowers eligible for the PSLF are workers like teachers, nurses, and firefighters who serve their local communities.
Am I entitled to a loan forgiveness under the new conditions of the PSLF?
The exemption only applies to federal loans, which make up the vast majority, or more than 90%, total student loan debt. Borrowers in government jobs may be able to receive a discount for FFELfederally guaranteed loans made through private lenders, Perkins loans, and other non-standard or non-income-tested repayment plans for federal loans under the expanded waiver (see below).
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 easiest way to find out if you qualify is to apply for the limited exemption. Completing the waiver will help you do things like consolidate different types of loans or certify previous periods of employment for credit.
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.
If you have FFEL or Perkins loans, you will need to consolidate them into direct loans. This process can take several weeks, and Lynch recommends completing the process “at least 45 days before filing the PSLF application.” This means that you should take steps to consolidate no later than the first week of September to ensure you have enough time to file.
Should I consolidate my non-direct loans?
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 non-direct Federal loans must consolidate their loans through the Direct Consolidation Program before applying for the expanded PSLF waiver.
You can consolidate eligible federal student loans into a direct loan online at the Federal Student Aid website – you can find the Consolidation Application here. This will combine your existing federal loans into one direct loan with one interest rate and one monthly payment. By consolidating into a single direct loan and then applying for the expanded PSLF waiver, your past payments can now count towards loan forgiveness, as long as you are in eligible government employment.
How does the student loan payment suspension affect my eligibility for the PSLF?
Federal student loan repayments have been on hold for more than two years and are currently set to expire. Under the PSLF, each such suspended payment counts as an eligible loan payment during that period. So if your payments were suspended for 26 months, that counts as 26 payments on time, bringing you closer to your goal of 120.
What if I didn’t receive credit for past payments?
In the past, if you made payments but your loan officer 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.
Will the expanded waiver become permanent?
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.
With millions of borrowers at risk of losing their student loan forgiveness if they don’t apply for the waiver by the deadline, many advocates are urging the White House to extend the waiver opportunity. So far, the Biden administration has not indicated any intention to make the new rules permanent.
Correction, January 25: This article previously stated that private loans would be eligible for student loan forgiveness under the new waiver. It was incorrect. 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.