PSLF was flawed from the beginning. It wasn’t simple. Federal student loan borrowers wrongfully assumed they automatically qualified for PSLF because they held public service jobs.
But that wasn’t the case. They had to meet five requirements:
Have loans made under the Direct Loan Program
Work full-time — i.e., at least 30 hours per week
Make payments under a qualifying repayment plan — i.e., the Standard Repayment Plan or one of the income-driven repayment plans
Make 120 qualifying payments — i.e., payments made on time and for the full amount due
Keep working for an eligible employer until the PSLF Form is processed and the remaining balance is forgiven
Thousands of borrowers dutifully made payments for years, believing they were working towards PSLF, only to reach the 10-year mark and have their application denied.
Many blamed the Education Department for not informing them of the program’s strict requirements. Others blamed the department’s private contractors for failing to tell them they wouldn’t qualify because they had the wrong types of loans or were enrolled in the wrong repayment plan. A handful complained they were steered into forbearances instead of payment plans that qualified for PSLF relief.
Related: Why Are FFEL Loans Not Eligible for PSLF?
Fewer than 1 percent of applicants got their loans discharged through the program.
To its credit, the government has tried to right its wrongs. Unfortunately, it took several years, a global pandemic, and a new administration to make good on the promise made to borrowers way back when.
2018 – Temporary Expanded PSLF
In 2018, the Trump administration tried to fix PSLF by creating a relief program for the relief program.* Temporary Expanded Public Service Loan Forgiveness promised to help borrowers who received bad information about PSLF and made payments under the wrong repayment plan.
The problem with TEPSLF reconsideration was two-fold. First, it only helped people who made their payments under the wrong repayment plan. It did nothing for those who spent years working for a qualifying employer but paid towards FFEL and Federal Perkins Loans.
Second, people were eligible for relief only if their most recent loan payment and the ones they made 12 months before they applied for TEPSLF were higher than what they would have paid if they had been enrolled in a qualifying repayment plan.
Needless to say, Temporary Expanded PSLF only helped a few borrowers. Another solution was needed.
*Republicans also tried to kill PSLF, arguing the costs were more than the government anticipated. But their efforts failed.
2021 – The Limited Waiver
The Covid-19 pandemic activated different laws that allowed the Trump and Biden administrations to not only pause student loan payments and freeze interest for millions of borrowers but also to eliminate the onerous PSLF Program rules temporarily.
Under the Limited PSLF Waiver, borrowers who worked full-time for the government or a nonprofit organization after Oct. 1, 2007, can get credit towards PSLF for a broader range of payments — including payments made towards FFEL Loans.
The PSLF changes have led to over 175 thousand borrowers getting more than $10 billion in debt relief.
Unlike the original PSLF Program rules, the qualifications for the waiver are simpler:
Work full-time for a qualifying employer anytime after Oct. 1, 2007
Consolidate ineligible loan types — i.e., FFEL, HEAL, and Perkins Loans — into a Direct Consolidation Loan
Submit a PSLF Employment Certification Form for every qualifying employer you’ve worked for after the program’s start date
Do those things by Oct. 31, 2022, and you’ll qualify for the waiver. Miss that date and the opportunity may be lost forever.
Visit the Federal Student Aid website, studentaid.gov, to consolidate and use the PSLF Help Tool to generate the employment certification form.
Related: Do Navient Loans Qualify for PSLF?
*Regrettably, parents who borrowed PLUS Loans for their children can’t get those loans forgiven under the waiver. But there are still other Parent PLUS Loan forgiveness opportunities.
2022 – The IDR Waiver
Borrowers had accused student loan servicers of giving inaccurate advice about their available loan repayment options. Many claimed that thousands of dollars of interest was added to their loan balances, and they missed out on getting credit towards loan forgiveness because they were steered into forbearance instead of an income-driven repayment plan.
On Apr. 19, the Education Department announced it would review its records and increase borrowers’ payment counts towards income-driven repayment plan forgiveness and PSLF.
Related: PSLF Forbearance Steering
The department estimates the one-time account adjustment will result in:
Immediate debt cancellation for at least 40 thousand borrowers under the PSLF program,
thousands of borrowers with older loans automatically qualify for income-driven repayment plan forgiveness, which wipes out the remaining balance after 20+ years of payments, and
over 3.6 million borrowers inching at least three years closer to IDR forgiveness.
Along with the added retroactive PSLF credit for time spent in long-term forbearances and some deferments, the Education Department established a PSLF reconsideration system to allow borrowers to get a second look at their PSLF eligibility.
If the Education Department owns your loans, you don’t need to apply for the IDR Waiver. But if you have commercially-held FFEL Loans, you’ll need to consolidate into a Direct Consolidation Loan to receive the one-time account adjustment.