Navigating the path to loan forgiveness can be complex, but there’s hope for borrowers with FFELP loans. Whether you work in public service, have made monthly payments for 20+ years, or are waiting for the outcome of the president’s debt relief plan under Supreme Court review, several opportunities for loan forgiveness are available to help you alleviate the burden of student debt.
All borrowers with FFELP loans held by the Department of Education (ED) who have accumulated time in repayment for at least 20 or 25 years will see automatic forgiveness of their loans. Other forgiveness options include:
1. Public Service Loan Forgiveness Program Waiver
Public service workers who were previously ineligible for PSLF due to their loan type can now consolidate their FFELP loans into the Federal Direct Loan Program and get credit for qualifying payments toward forgiveness.
The PSLF Waiver has eliminated nearly $40 billion in loans. MOHELA, the student loan servicer responsible for the PSLF Program, continues to process more applications.
2. IDR Waiver Application Timeline and Forgiveness Milestone Impact
The Income-Driven Repayment Waiver, a one-time account adjustment announced by President Biden, offers a comprehensive forgiveness solution for eligible borrowers.
It covers the forgiveness of remaining loan balances for those in repayment for at least 20 or 25 years, including FFELP borrowers not working in government or nonprofit organizations and those with loans held by ED, such as FFEL Consolidation Loans, Parent PLUS Loans, Federal Perkins Loans, and Health Education Assistance Loans (HEAL) Loans.
Qualifying for FFELP Loan Forgiveness Under the IDR Waiver
To qualify for FFELP loan forgiveness under the IDR Waiver after 20 years, borrowers must:
Borrow solely for undergraduate education,
Consolidate their FFEL Loans into a Direct Consolidation Loan,
Opt for the Revised Pay As You Earn repayment plan, and
Meet the eligibility criteria for the IDR Waiver.
Failing to follow these steps will result in a longer waiting period of 25 years for forgiveness under the Income-Based Repayment or Income-Contingent Repayment Plans.
Timeline for IDR Waiver Applications and Forgiveness Milestone Impact
The Department of Education initially aimed to complete IDR Waiver applications by the end of 2023, but due to staffing and resource limitations, they have extended the deadline. They now plan to begin processing IDR account adjustments this spring for those who have reached their forgiveness milestone.
The application of the IDR Waiver depends on whether borrowers reach their forgiveness milestone before or after August 1, 2023:
If you reach your forgiveness milestone before August 1, 2023, the Department of Education expects to discharge your loans before student loan payments restart.
If you reach your forgiveness milestone on or after August 1, 2023, you will likely have to start making payments after the payment pause ends. However, you’ll receive a refund for any payments beyond the number required for forgiveness.
Private Student Loan Forgiveness Loophole
Although private student loan borrowers are typically excluded from forgiveness, a loophole exists for those who paid off or refinanced their loans during the pandemic.
3. Navient FFELP Loan Forgiveness
Federal student loan borrowers holding Navient FFEL Loans may qualify for forgiveness if they work for the government, qualifying not-for-profit organizations (including religious ones), or have had their loans for 20 years or more. FFEL borrowers need to consolidate their loans into the Direct Loan Program before the end of the year to be eligible for the pending waiver.
Navient FFELP loans possess unique rules and repayment terms not covered by recent White House loan cancellation eligibility guidelines. Often referred to as commercial loans or privately-held federal loans, they are federal loans issued by commercial lenders (e.g., SunTrust, Chase) and backed by guaranty agencies and the federal government.