What is Public Service Loan Forgiveness and the Limited Waiver?

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Stanley tate

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Public Service Loan Forgiveness (PSLF) is a popular but flawed student loan forgiveness program. It’s supposed to wipe out student debt for borrowers who enter public service careers, such as teaching, nursing, firefighting, public interest law, the military, law enforcement, and religious work.

However, since its inception, this program has been marred by allegations of mismanagement, leading to lawsuits by state attorneys general and various organizations in the public sector.

Despite those issues, the PSLF Program still exists and will not go away any time soon. And so far, under the Biden Administration, PSLF has been improved and expanded to allow more borrowers to qualify for cancellation of the remaining balance on their eligible loans.

Keep reading to learn more about this loan forgiveness program, including the recently announced PSLF Limited Waiver Opportunity.

Disclaimer: I am a student loan lawyer, but this post contains general information and should not be taken as legal advice. If you want legal advice that pertains to your specific situation, you should schedule a free consultation with me.

What is the Public Service Loan Forgiveness (PSLF) Program?

Public Service Loan Forgiveness (PSLF) is a program Congress designed to forgive federal student loan debt for borrowers who work in the government or certain non-profit organizations.

PSLF wipes out your loan balance, including interest, after you’ve made 120 qualifying payments while working for an eligible employer.

Under this program, it is in your best interest as a borrower to keep your loan payments as low as possible until your student loans are forgiven after 10 years. Consider going on an income-driven repayment plan, if possible, to keep those monthly payments low.

What are the benefits of PSLF? The benefits of PSLF include complete cancellation of student loan debt at the end of 120 months of qualifying payments, even if you have a substantial remainder. Another advantage is that a lot of people work in qualifying public service jobs.

Can student loans be forgiven after 10 years? Yes, borrowers who work in the public sector and make 120 qualifying payments on Direct Loans can qualify for forgiveness under the PSLF Program.

Unfortunately, because of the program’s requirements and how it’s been managed, few borrowers have gotten their eligible loans forgiven after 10 years.

Will PSLF go away? No, Public Service Loan Forgiveness is unlikely to go away. But it will change in the future.

In a recent PSLF Fact Sheet released October 6, 2021, Education Secretary Miguel Cardona announced that the Department would try to permanently improve the program through the negotiated rulemaking process in the coming months.

Problems with the PSLF Program

Since its launch in 2007, the PSLF Program has been under fire for not delivering on its promise to public servants. Only about 1% of applicants have been approved for forgiveness under PSLF.

The American Bar Association and the attorneys general for Colorado, Massachusetts, and New York have all filed lawsuits against loan servicers, alleging the companies hindered borrowers' ability to take advantage of the program.

According to the FSA Data Center, as of 2019, 90,962 borrowers have submitted a PSLF application. Of those, only 862 have been approved.

PSLF eligibility problems are two-fold:

First, the program has strict requirements which borrowers must meet every year.

Second, according to the Consumer Financial Protection Bureau, student loan servicers have engaged in systemic mismanagement of the PSLF Program. For instance, the CFPB found that servicers:

  • gave incorrect information to borrowers
  • improperly allocated monthly payments
  • incorrectly calculated payment amounts
  • misled consumers with older student loans (e.g., FFEL Loans) to believing they couldn’t access PSLF

Who’s gotten PSLF so far? According to data from the Education Department, 8,429 borrowers have been deemed eligible for gotten forgiveness. That’s a tiny number compared to the 700,000+ borrowers who have applied for PSLF. The 8,429 figure includes 5,467 approved for PSLF and 2,962 for TEPSLF.

That means only 1.16% of all applications have ever been approved to have their student debt wiped out.

Changes to the PSLF Program

Public Service Loan Forgiveness has undergone three significant changes:

  • Temporary Expanded Public Service Loan Forgiveness (TEPSLF). The TEPSLF Program allows borrowers with Direct Loans to qualify for forgiveness if they made payments under the wrong student loan repayment plan. It does not give borrowers credit for payments made on Perkins Loans or FFEL Loans.
  • Public Service Limited Waiver Opportunity. The temporary waiver allows for a broader range of past payments to count towards loan forgiveness, including payments made on FFEL and Perkins Loans.
  • All federal student loans held by the Education Department have been placed in forbearance since the start of the COVID-19 pandemic and until January 2022. As part of the payment freeze, borrowers working full-time for an eligible employer during those months will receive credit towards the 120 payments needed to qualify for PSLF. In other words, even if you have not made a payment since March 2020, you will get PSLF credit through the end of the forbearance in January 2022 as if you had been making payments. As a result, you are 22 months closer to forgiveness.

Public Service Limited Opportunity Waiver

The Biden Administration recently announced plans to overhaul the Public Service Loan Forgiveness Program over the next year, including granting a temporary waiver to the program’s requirements.

Under the PSLF Limited Waiver Opportunity, the U.S. Department of Education will give borrowers credit for prior payments made towards their federal student loans, regardless of the payment plan they’ve been on.

Previously, only payments made under income-driven repayment plans would qualify.

I give step-by-step instructions on all how to apply for the waiver in my premium guide, PSLF Waiver: Guide to Applying.

What is the difference between PSLF and income-driven repayment plans? PSLF and income-driven repayment (IDR) plans are two different functions of federal loans. IDR plans are one way you can pay back student loans; PSLF is how you can seek cancellation of student loans.

The waiver is temporary. Borrowers have until October 31, 2022, to take advantage of the waiver.

How is the PSLF Waiver different from PSLF and TEPSLF? The PSLF Limited Waiver opportunity is more expansive than the PSLF and TEPSLF programs. It allows more borrowers to qualify for loan forgiveness.

Both the PSLF Program and TEPSLF Program still exist. But they remain a challenging hurdle for borrowers seeking forgiveness.

For example, new data released by the U.S. Department of Education shows that as of April 2021, only 2 out of every hundred PSLF applications were approved. Similarly, according to a recent Government Accountability Office report, 1% of TEPSLF applications were approved.

1. What does the PSLF Waiver do?

The limited waiver gives borrowers an accurate PSLF payment count. It gives credit for payments servicers rejected because the payments were made for the wrong type of loan, under the wrong repayment plan, or were made late, or weren’t made for the total amount due.

It also gives military service members credit for forbearances placed on their accounts while on active duty.

2. Who qualifies for the PSLF Waiver?

You qualify for the limited PSLF waiver if:

  • you’ve worked full-time for the government (including active duty military) or a non-profit organization at some point after October 1, 2007
  • you made some monthly payments towards your loans

The waiver grants payments to be counted towards PSLF that were previously excluded. Your loans are eligible for PSLF if you meet the eligibility requirements, and:

  • you have Direct Loans (including Direct Consolidation Loans), and/or
  • you have or had loans made under the Federal Family Education Loan (FFEL) Program, and/or
  • you have or had Federal Perkins Loans.

How do I know if my employer qualifies for the Limited PSLF Waiver? Your employer qualifies for PSLF if it is a government agency (local, state, or federal), 501(c)(3) non-profit, or a non-profit organization that provides a qualifying public service.

If you have your employer’s Employer Identification Number, you can use the PSLF Help Tool to check whether it qualifies. You can find the EIN on your W2.

How can I find out what type of loans I have? The Federal Student Aid website lists all of your federal student loans. In the list of the Loan Breakdown Section, you’ll see a list of each loan you have taken out, even if you’ve paid it off or consolidated it.

3. Who doesn’t qualify for the PSLF Waiver?

You’re ineligible for the PSLF Waiver if you’ve never worked in public service or you’re seeking forgiveness of:

  • Parent PLUS Loans
  • defaulted student loans
  • private student loans

Parent PLUS Loan borrowers remain eligible for the PSLF Program.

4. How to apply for the PSLF Waiver

The process for applying for the PSLF Waiver depends on your loan type.

  • Borrowers with at least one FFEL or Perkins Loan must (1) consolidate their non-Direct Loans into a Direct Consolidation Loan and (2) submit a PSLF form.
  • Borrowers with only Direct Loans who have never certified employment must submit a PSLF Form.
  • Borrowers with only Direct Loans who have previously certified employment will automatically get credit for payments made on the wrong loan type and repayment plan and for payments made late or less than the total amount due. However, if you have periods of unverified employment from October 1, 2007, through the present, you will need to submit a PSLF form to get credit for the payments made.

You can consolidate your loans for free at studentaid.gov.

You can also submit a PSLF form through that site by using the PSLF Help Tool.

You have until October 31, 2022, to apply for the waiver regardless of which group you fall under.

Have more questions? I’ve walked dozens of people through the process. Get my guide to PSLF Waiver: Guide to Applying for comprehensive answers and step-by-step instructions to taking advantage of this limited opportunity.

How to get Public Service Loan Forgiveness

While the temporary waiver is limited, the Department of Education is looking to make permanent changes to PSLF through the rulemaking process. But even if those changes come to pass, many of the current requirements will likely remain in place.

What are the terms of PSLF? Under the current PSLF terms, student loan borrowers qualify for loan forgiveness if they:

  • have the correct type of loans
  • work full-time for a qualifying employer
  • make payments under an income-driven repayment plan
  • ​make 10 years’ worth of payments

Let’s go over each requirement in detail.

1. Have the correct type of loans

What types of loans are eligible for PSLF? Only loans made under the Federal Direct Loan Program are eligible for PSLF. Private student loans aren’t eligible. There’s no way to refinance or consolidate private student loans into a federal student loan.

Other federal student loans — FFEL and Perkins loans — are eligible for PSLF, but only if you apply for consolidation.

2. Work full-time for a qualifying employer

Your employer — not your job title — is what determines your eligibility for the program. Qualifying employers include:

  • city, local, state, and federal government agencies
  • school districts and charter schools
  • active-duty military service
  • 501(c)(3) non-profits
  • ​non-profit organizations that provide a qualifying public service
  • AmeriCorps or the Peace Corps
  • religious organizations (but only for non-proselytizing work)

How do you check if your employer qualifies for PSLF? You can check if your employer qualifies for PSLF by submitting an employer certification form.

Currently, FedLoan Servicing oversees the PSLF program for the Department. However, the company has announced it will end its loan servicing contract at the end of 2021.

To keep aware of the changes, make sure your contact information is up to date with your loan servicer and with the Department of Education.

Are government contractors eligible for PSLF? Unfortunately, borrowers who work for a private company but at a government agency aren’t eligible for PSLF. The program’s rules require you to work directly for the government to qualify for loan forgiveness.

3. Make payments under an income-driven repayment plan

Unless you’re eligible for the temporary waiver, you must make your payments on a qualifying repayment plan, which includes the Standard 10-year plan or one of the income-driven repayment plans (IBR, ICR, PAYE, or REPAYE) to qualify for PSLF.

Most student loan borrowers will save the most money by making their qualifying payments under an IDR plan. However, suppose you’re a higher earner, and the waiver pushes your payment count close to loan forgiveness.

In that case, your monthly payments may be cheaper under the Standard Repayment Plan.

Under the current PSLF rules, payments made while in the Graduated or Extended repayment plans don’t count. However, payments made under those plans may still qualify under both the Temporary Expanded Public Service Loan Forgiveness and the PSLF Limited Waiver Opportunity.

4. Make 10 years’ worth of payments

Loan forgiveness isn’t automatic because you’re a teacher, healthcare worker, law enforcement officer, or other public service worker. You have to make 120 student loan payments before you’re eligible for PSLF.

Under the current rules, those payments must be made:

  • within 15 days of your due date
  • for the total amount due

Payments made while you’re in deferment, forbearance, or in default don’t count. (Under the PSLF Waiver, active duty service members can get credit for the period when their accounts were in deferment or forbearance.)

Your payments don’t have to be made consecutively. For example, you could make some qualifying payments, miss a few months, and then pick up where you left off. You can also change employers — including leaving public service and resume progressing towards PSLF.

Lump-sum future payments are allowed. As of August 2020, if all other program requirements are met, prepayments will count for up to 12 months or the next time you’re due to recertify to complete your annual recertification, whichever is sooner.

How to apply for PSLF?

Each year, thousands of PSLF applications are submitted, but only a handful are approved. Most are denied because they made payments on the wrong type of loan or under the wrong repayment plan, or they hadn’t made enough payments.

Remember, you have to make 120 qualifying payments to be eligible for the program.

The best way to track your progress towards those payments is to submit an Employment Certification Form when you submit your annual recertification for income-driven repayment.

If you’ve never submitted that form, you’ll want to submit one for your current and any former qualifying employer. If a former employer has closed, you can still submit a certification form.

But you may need to provide proof in the form of W2s and pay stubs that you worked full-time and that it was a qualified employer.

What happens if my application for PSLF is approved? If your PSLF application is approved after making 120 qualifying payments, the remaining balance of your loans (including principal and interest) will be forgiven.

Find the PSLF requirements confusing? Let’s talk.

You’re not alone if you’re unsure whether you’re eligible for the PSLF Program. It’s a confusing program with a lot of rules that you have to strictly follow. Schedule a free 10-minute call with me to see how I can help.

Also, if you’re interested in more expert student loan knowledge, sign up for my email newsletter for tips and tricks on navigating your student loan debt. After managing over 400 million in student loans, I promise to give you the best information out there.

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I'm a student loan lawyer that helps people like you with their federal and private student loans wherever they live.

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