The Biden administration is stepping up efforts to encourage borrowers to apply for a student loan forgiveness initiative before it expires in October.
The initiative — a temporary expansion of a student loan forgiveness program for borrowers working in public service jobs — has already resulted in over $8 billion in approved student loan cancellation for thousands of borrowers, according to the Department of Education. But advocates are worried that many more borrowers may not realize that they qualify for relief.
Student Loan Forgiveness For Public Service Workers Through Temporary Waiver
The Public Service Loan Forgiveness (PSLF) program was enacted by Congress in 2007 to provide student loan forgiveness to borrowers who commit to working in public service careers. Borrowers who work for 10 years or longer in nonprofit or government jobs while meeting other program requirements can get their entire federal student loan balance cancelled under the program.
But since its enactment, PSLF has been mired in problems due to complex eligibility rules, administrative problems, and poor oversight. As a result, approval rates hovered in the one to two percent range for years.
The Biden administration announced a temporary fix to PSLF’s problems in October. Through the Limited PSLF Waiver, the Education Department temporarily relaxed some of the program’s strict rules to retroactively count prior loan periods that otherwise could not qualify towards PSLF, including payments made under the “wrong” repayment plan or on the “wrong” type of federal student loan. The administration went even further in April to permit certain past periods of deferment and forbearance to count towards PSLF, as well.
But the Limited PSLF Waiver program is only available for a relatively short period of time — and that time is sending soon, with an October 31 expiration date approaching. Advocates are growing increasingly concerned that millions of borrowers may not know about the Limited PSLF Waiver opportunity, particularly in light of the ongoing student loan pause on payments, which has now entered its third year.
Biden Officials Step Up Efforts To Notify Borrowers of Student Loan Forgiveness Opportunity
As the October deadline approaches, Education Department officials are stepping up efforts to notify borrowers of the soon-expiring Limited PSLF Waiver.
“From now until October 31, a Limited PSLF Waiver temporarily changes the program rules” for PSLF, said Undersecretary James Kvaal in a mass email to Direct loan borrowers this month. “Spread the word with coworkers, friends, and family who work in public service… Tell them to act before Oct. 31!”
“The #PSLF Waiver has simplified the process of getting loan forgiveness. But you have to be signed up by October,” warned Education Secretary Miguel Cardona in a tweet this week. “I encourage everyone – even if you have been denied before or used other benefits – to apply.”
Last month, the Education Department indicated that it has already approved $8.1 billion in new student forgiveness under the waiver initiative. But advocates for student loan borrowers are increasingly sounding the alarm and have urged the Biden administration to extend the waiver. The Student Borrower Protection Center (SBPC) released data last month suggesting the program may be underutilized, with millions of student loan forgiveness remaining on the table.
During a press call last week, Kvaal indicated that Biden administration officials are “continuing to assess the PSLF waiver… My advice would be for borrowers to apply before October 31, 2022 to ensure that they get the benefits of the waiver.”
How to Apply for Student Loan Forgiveness Through the Waiver
Here’s how to pursue the Limited PSLF Waiver initiative:
- Review the Department of Education’s current guidance on the Limited PSLF Waiver program, with includes a detailed FAQ section.
- Borrowers who already have Direct federal student loans and have already certified their public service employment may not have to take any action. Borrowers who need to certify or re-certify their PSLF employment by completing the required PSLF employment certification forms can use the Department of Education’s PSLF Help Tool.
- The Education Department indicates that borrowers with FFEL loans or Perkins loans (which temporarily qualify for PSLF relief under the waiver initiative) would need to consolidate those loans via the federal Direct consolidation program before the October 31, 2022 deadline to benefit. “Periods of repayment on loans before consolidation count” under the Limited PSLF Waiver initiative, says the Department, unlike under the original PSLF program rules. Borrowers can consolidate online via the Department’s website. Be sure to review the pros and cons of consolidating before proceeding, and borrower should be aware that the consolidation process can take 30 to 60 days, and sometimes longer.
- FFEL borrowers should first verify that they have qualifying employment (by using the PSLF Help Tool), before consolidating. If their employment qualifies, FFEL borrowers can then proceed with Direct loan consolidation. After their loans have been consolidated, they can submit their PSLF employment certification forms to MOHELA, the new PSLF loan servicer contracted with the Department of Education.