You’re entitled to a refund if the PSLF Waiver credits you for more than 120 qualifying payments on an existing Direct Loan. But if you made those payments towards a Federal Perkins Loan or FFEL Loan and then consolidated, you won’t get a refund.
The Public Service Loan Forgiveness Program promises tax-free debt relief after borrowers work for the government or a nonprofit organization for 10 years while repaying their Direct Loans on-time under an income-driven repayment plan.
Sounds simple, right?
Unfortunately, many public servants who attended college before the mid-2010s didn’t have those types of loans. Sure, they had federal student loans. But they had loans made under different programs that didn’t automatically qualify for PSLF cancellation. To qualify, they needed to consolidate their Federal Family Education Loans and Perkins Loans into a Direct Consolidation Loan.
Again, simple enough.
But the problem is that none of the payments borrowers made before they consolidated counted as qualifying payments for PSLF. They had to pay for 10 more years before their student debt could be forgiven.
That changed during the pandemic. The Biden administration temporarily relaxed the program’s eligibility requirements to allow borrowers to consolidate and get retroactive PSLF credit for the monthly payments they made before consolidating, and some of the time that their loans were in deferment or forbearance.
Since being announced last October, the Limited PSLF Waiver has erased more than $10 billion in federal student loan debt for nearly 200 thousand public servants — many of whom paid for much longer than they needed to had they had the right loans from the beginning.
The question many of them have is, “Will I get a refund for PSLF?”
The answer is that it depends.