The Biden administration has approved billions of dollars in student loan forgiveness under an expansion of a popular program for borrowers working in public service careers. But the initiative is temporary and set to end in just a few months.
Advocates are increasingly sounding the alarm that thousands of borrowers may not even realize that they qualify for student loan forgiveness, and they may lose out on critical relief once the program ends. Top Biden administration officials have suggested that an extension if possible, but the messaging has been mixed.
Here’s where things stand.
Over $8 Billion in Student Loan Forgiveness Under Expanded Program for Public Service Workers
Under the Public Service Loan Forgiveness (PSLF) program, federal student loan borrowers who commit to working 10 years or more in the nonprofit or public sector can potentially get their federal student loans completely forgiven. But since its creation in 2007, PSLF has suffered from complicated eligibility rules, poor oversight and administration, and dismal approval rates that hovered in the one to two percent range.
To address the program’s shortcomings, in October the Biden administration announced the Limited PSLF Waiver initiative, which temporary eases the PSLF program’s strict eligibility rules to allow past loan periods that otherwise would have been rejected under the original program rules to “count” towards PSLF. This includes payments made on non-qualifying federal loans, payments made under non-qualifying repayment plans, and certain periods of deferment and forbearance.
Last month, the Education Department indicated that it has approved $8.1 billion in new student forgiveness under the Limited PSLF Waiver initiative.
“The changes made to the #PSLF program have been life changing to so many people across the country,” said Education Secretary Miguel Cardona in a tweet last week.
Limited PSLF Waiver Ends in October, and Borrowers Could Lose Out on Student Loan Forgiveness
While the Limited PSLF Waiver is seeing some success, it is also temporary, and will end on October 31, 2022. Barring an extension, the program would revert back to the original PSLF rules, which were far more restrictive.
Earlier this week, the Education Department released proposed new regulations for the PSLF program. The new rules would codify some elements of the Limited PSLF waiver, including some additional flexibility for counting qualifying payments, and allowing for certain deferment and forbearance periods to count towards PSLF in limited cases. But the proposed regulations would not be nearly as broad or sweeping as the relief provided by the Limited PSLF Waiver. And the earliest the new rules would be effective would be in July 2023 — leaving an eight month gap between the end of the waiver and the enactment of new PSLF regulations.
Last month, student loan borrower advocacy organizations called on the Biden administration to extend the Limited PSLF Waiver program beyond the October 31 deadline. Citing data suggesting the program may be underutilized, the Student Loan Borrower Protection Center (SPBC) urged the Education Department to push out the program’s end date.
“We’ve only scratched the surface” of relief under PSLF, said SBPC executive director Mike Pierce in an earlier statement. “Secretary Cardona needs to recognize that you can’t have too much of a good thing — extend the waiver now and deliver debt relief for millions in the future.”
Top Biden Officials Send Mixed Messages On Possible Extension of PSLF Waiver
Whether the Biden administration will extend the Limited PSLF Waiver beyond the October 31 deadline remains to be seen.
At a student aid conference last week, Undersecretary of Education James Kvaal said officials are “looking at” extending the waiver, but they generally view the new PSLF regulations as a better route for providing relief to borrowers.
During a press call with reporters on Wednesday unveiling the proposed new PSLF regulations, Kvaal was asked directly whether the Education Department is considering an extension of the waiver. “We are continuing to assess the PSLF waiver,” he said. “My advice would be for borrowers to apply before October 31, 2022 to ensure that they get the benefits of the waiver.”
While some borrowers will get automatic student loan forgiveness under the Limited PSLF Waiver, other borrowers — in particular, borrowers with FFEL loans and borrowers who have not formally certified their public service employment — may need to take steps to qualify before the October 31 deadline. Borrowers can review Limited PSLF Waiver guidance via the Department of Education’s website for an overview of the initiative.
Further Student Loan Reading
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