The student loan forgiveness program for public servants has been riddled with problems from the start. The federal government recently took a hatchet to the rules and announced a temporary, limited PSLF Waiver that allows borrowers to count payments made under any repayment plan for nearly any federal loan type — including FFEL Loans and Federal Perkins Loans.
Not so long ago, the Biden administration overhauled the Public Service Loan Forgiveness (PSLF) Program and introduced sweeping changes to push an estimated half a million borrowers closer to finally shedding their debt. The U.S. Department of Education projects that the limited PSLF Waiver will forgive the balances of 22 thousand borrowers immediately and increase the payment count automatically for another 550 thousand.
As of July 7, more than 145 thousand borrowers have received $8.1 billion in forgiveness under the PSLF waiver, according to the Wall Street Journal.
Ahead, learn what the limited PSLF Waiver is, who qualifies, how to apply, and what to do if your loans aren't forgiven.
What is the PSLF Waiver?
The Public Service Loan Forgiveness Waiver is a temporary program designed to push teachers, police officers, nurses, veterans, and other public service workers across or closer to the forgiveness finish line.
This limited opportunity softens the rigid rules for the PSLF Program and the Temporary Expanded Public Service Loan Forgiveness Program, both of which failed miserably. Since 2017, over 725 thousand TEPSLF and PSLF applications have been submitted. The Education Department approved less than 2%.
The temporary waiver aims to raise that number by allowing borrowers to sidestep the program's stringent rules and receive PSLF credit for all types of payments made on federal student loans, including:
- Payments made toward loans made under the Federal Perkins and Federal Family Education Loan Programs.
- Loan payments made under a non-qualifying repayment plan.
- Late payments.
- Past payments for less than the full amount.
The new program rules give military service members a special benefit: all months spent on active-duty count towards PSLF — even if the loans were in deferment or forbearance and not being repaid.
The waiver period ends Oct. 31, 2022. You have to start the consolidation process and apply for the limited waiver by that date or you’ll miss out on getting extra PSLF credit.
The Education Department recently proposed to make the PSLF changes permanent by modifying the program’s rules.
"Borrowers who devote a decade of the lives to public service should be able to rely on the promise of Public Service Loan Forgiveness." said Miguel Cardona, the Secretary of Education.
How to get the Public Service Loan Forgiveness Waiver
The steps needed to take advantage of the limited PSLF Waiver depend on the type of loans you have and your history with PSLF.
If you have all Direct Loans...
You do not need to consolidate. If you haven't already done so, certify your eligible employment with every qualifying employer you've worked for since October 1, 2007. Once that's done, the Department of Education will automatically begin calculating your qualifying payments.
You can certify your employment using the PSLF Form.
If you still have FFEL Loans...
You'll need to consolidate FFEL Loans (and any Perkins Loans) into a Direct Consolidation Loan. The Education Department will allow you to consolidate even if you only have an FFEL Consolidation Loan.
You can consolidate for free on the FSA website, studentaid.gov. You can choose any new student loan servicer when you submit your application. But since MOHELA is taking over PSLF, it makes sense to choose them to handle your loan consolidation.
After you consolidate, you'll need to submit a PSLF Employment Certification Form for each qualifying employer you've worked for since October 1, 2007.
Note: Student loan Borrowers with FFEL Joint Spousal Consolidation Loans are kicked out of this relief. They cannot consolidate to take advantage of the waiver.
Learn More: How to Consolidate Student Loans for PSLF?
If you have Parent PLUS Loans...
You're not eligible for the PSLF Waiver — even if you consolidated your loans into a Direct Consolidation Loan. Although Parent PLUS Loan borrowers aren't eligible for the waiver, they remain eligible for the PSLF Program based on their employment.
Learn More: How to Get Rid of Parent PLUS Loans
PSLF Waiver Timeline
The PSLF Waiver ends on Oct. 31, 2022. To get credit for your past public service employment, you’ll need to consolidate your non-Direct Loans before the deadline. The consolidation doesn’t need to be completed before then, but you do need to submit it before November.
Once you submit your application, here’s a timeline for one of my clients who got nearly $80 thousand erased under the PSLF Waiver:
- February 12 - We apply for loan consolidation.
- March 3 - My client receives the loan summary statement showing her consolidation will be completed within a few weeks. We submit the PSLF paperwork.
- April 6 - Her consolidation completes.
- June 2 - FedLoan emails her and says she has 3 PSLF eligible payments under the old PSLF rules.
- June 22 - FedLoan reviews her account under the PSLF Waiver rules, updates her payment count to 120, and wipes out her remaining balance.
MOHELA took over the PSLF Program in July. I anticipate it will take about 3-4 months to get an updated payment count. If you need to consolidate FFEL Program loans before applying for PSLF, choose MOHELA as your new student loan servicer.
Learn More: MOHELA Student Loans
Who qualifies for the PSLF limited waiver?
For a limited time, the PSLF waiver benefits nearly all federal student loan borrowers who worked full-time for the government or a nonprofit anytime after Sept. 2007. Public servants who borrowed parent loans for their children are the one exception: Parent PLUS Loans aren't eligible for the waiver.
You don't need to have worked in public service all those years. You qualify for the waiver opportunity even if you changed employers or left for the private sector. You'll get credit for the payments you made while working for a qualifying employer.
Borrowers eligible for the PSLF Waiver:
- Full-time government and nonprofit employees.
- Retired public service workers.
- Borrowers who no longer work in public service — even those who left due to the pandemic.
Borrowers not eligible for the PSLF Waiver:
- Borrowers with Parent PLUS Loans, including consolidation loans that paid off Parent PLUS Loans.
- Public servants who only have private student loans — relief is limited to federal Direct Loans.
- Borrowers who stopped working in public service before Oct. 1, 2007.
- Volunteers at government and nonprofit organizations.
- Borrowers who work for a private company that provides services to the government or a nonprofit.
- Teachers and employees who work at a for-profit charter school or university
- Borrowers who've worked only in the private sector
Learn More: Student Loan Waivers
PSLF Waiver Refund Opportunities
Some borrowers will get a refund for extra PSLF payments made on Direct Loans, according to the Education Department. The refund is automatic for any payment made on Direct Loans over the 120 qualifying payments threshold for PSLF.
You will not get a refund for excess payments made on FFEL Loans before consolidating. The same goes if you've already had your loans forgiven or paid them off: You aren't eligible for a refund of prior payments, according to Federal Student Aid.
What if the PSLF Waiver doesn't forgive my loans?
The limited waiver will bring many public servants closer to the relief they've been denied for years. But many will fall just short after getting an updated payment count. To get their remaining balance forgiven, they'll need to follow the PSLF Program's original complicated rules and make the additional monthly payments while working for the government or nonprofit — even if they've retired or left public service for greater earnings in the private sector.
A borrower qualifies for PSLF if they:
- Have Direct Loan Program loans (Subsidized, Unsubsidized, and Consolidation).
- Work full-time for the government or qualifying nonprofit organization.
- Enroll in a qualifying student loan repayment plan (Standard Payment Plan and IDR Plans).
- Make 10 years' worth of student loan payments for the full amount due.
Teachers, nurses, and other public service workers who declined to get vaccinated during the pandemic can still apply for the waiver. But if they fall short of the 120 payments, they'll need to find work with a government or non-profit organization to make the remaining payments. If not, they'll likely need to wait for 20-year student loan forgiveness.