• December 3, 2022

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This is the final week to apply for student loan forgiveness under a one-time fix to the Public Service Loan Forgiveness (PSLF) program, called the Limited PSLF Waiver. The waiver initiative has already resulted in thousands of student loan borrowers receiving billions of dollars in loan forgiveness that they otherwise might not have qualified for.

If you haven’t taken steps to apply yet, there’s still time. Here’s what borrowers should know.

How Public Service Loan Forgiveness Worked Before

Public Service Loan Forgiveness (PSLF) is a student loan forgiveness program for borrowers who commit to working for nonprofit or government organizations. Congress enacted the program in 2007, and it can result in complete federal student loan forgiveness in as little as 10 years.

But Congress originally created rather complex eligibility rules for PSLF, which in turn were not always properly communicated to borrowers by the Education Department and its network of student loan servicers. The program required 120 “qualifying payments” (which, if made consecutively, is equivalent to 10 years, although consecutive payments are not required). Only payments made on Direct federal student loans under either a 10-year Standard plan or one of the available income-driven repayment (IDR) plans would count, and the payments needed to be made within 15 days of the billing due date. Payments made on the “wrong” kind of federal student loan (such as FFELP loans), under the “wrong” type of repayment plan (such as an Extended or Graduated plan) would not count. And payments that were made too early or too late relative to the due date could get rejected on technicalities.

As a result of these issues, the PSLF program never really eclipsed a two percent approval rate.

Student Loan Forgiveness Through Limited PSLF Waiver

The Biden administration enacted the Limited PSLF Waiver last year as a one-time, temporary fix to the long-running problems with the PSLF program.

Under the Limited PSLF Waiver, the Education Department can retroactively count prior loan periods as far back as October 2007 as “qualifying payments” towards PSLF, as long as the borrower was working in qualifying public service employment. Past loan periods that can count include:

  • Any period of repayment on any Direct, FFELP, or Perkins loans under any repayment plan, regardless of whether the payment was made in full or on time. This includes periods prior to loan consolidation.
  • Forbearance periods of 12 consecutive months or greater, or 36 cumulative months or greater.
  • Months spent in deferment before 2013 (other than in-school deferments), as well as economic hardship deferments on or after Jan. 1, 2013.

Through these sweeping changes, millions of federal student loan borrowers will dramatically advance their progress towards student loan forgiveness under PSLF, and many will receive complete loan forgiveness.

But the Limited PSLF Waiver initiative is a one-time fix, and it is set to end on October 31. After that, the original PSLF rules go back into effect.

Applying for Student Loan Forgiveness Under the PSLF Waiver

Some borrowers may not have to take any action to benefit from the Limited PSLF Waiver. In particular, borrowers who have all Direct federal student loans (either because they started off with all Direct loans, or subsequently consolidated Direct or FFELP loans into a federal Direct consolidation loan), and have already certified their public service employment using PSLF Employment Certification forms, may get credit under the waiver automatically.

But other borrowers may need to take action:

  • Borrowers with FFELP loans or Perkins loans who want those loans to get credit under the Limited PSLF Waiver must consolidate those loans through the federal Direct consolidation program by October 31.
  • Borrowers with multiple federal student loans (whether they are Direct loans or FFELP loans) with different counts of PSLF payments can consolidate their loans through the Direct loan consolidation program by October 31 to maximize PSLF credit. Through the Limited PSLF waiver, the Education Department says it will apply the highest number of qualifying PSLF payments to a Direct consolidation loan based on the PSLF counts of the individual loans being consolidated.
  • Borrowers who have not certified all of their public service employment (whether they have FFELP loans or Direct loans) must complete and submit PSLF Employment Certification forms by October 31. The Education Department strongly recommends that borrowers use the online PSLF Help Tool to create their PSLF forms that subsequently would need to be signed by their employer.

What the October 31 Deadline Means for Student Loan Forgiveness

The Direct consolidation process normally takes a month or two. However, the Education Department says that borrowers must simply submit their Direct loan consolidation application online through StudentAid.gov by October 31 for it to be considered timely.

For the PSLF Employment Certification forms, the Education Department says, “Don’t panic! You don’t have to submit a PSLF form to MOHELA [the Dept. of Education’s PSLF loan servicer] by Oct. 31, 2022, if you have completed” certain steps:

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  • Use the PSLF Help Tool by October 31 and complete all required steps to generate a PSLF form that is subsequently printed, signed, submitted, and approved.
  • Submit a manual PSLF form (not generated by the PSLF Help Tool) with your employer’s signature dated on or before Oct. 31, 2022, which is later approved. “To receive benefits of the limited PSLF waiver, the employer’s signature and date on your PSLF form must be on or before Oct. 31, 2022, even if you submit your form at a later date,” says the Education Department.

The Biden administration has created a website with detailed guidance on the Limited PSLF Waiver application process, including more details on which loans and past loan periods qualify, as well as instructions on exactly what borrowers need to do to benefit from the Limited PSLF Waiver in these final days of the program. Borrowers should carefully review all of the published guidance on that website to understand their options and obligations.

Student Loan Forgiveness is Temporarily Blocked, But Not for PSLF

Borrowers should know that the Limited PSLF Waiver is entirely distinct from Biden’s one-time student loan forgiveness program that can provide $10,000 or up to $20,000 in student loan forgiveness for borrowers with eligible loans who have earned within certain income guidelines.

Last week, a federal appeals court temporarily blocked implementation of Biden’s one-time student loan forgiveness program in response to a lawsuit brought by Republican-led states. However, that administrative stay only applies to the one-time cancellation program. It does not apply to PSLF.

In addition, while FFELP loans are excluded from relief under the one-time cancellation initiative following a policy reversal by the Biden administration several weeks ago, FFELP loans can still potentially benefit from the Limited PSLF Waiver and ultimately qualify for student loan forgiveness if borrowers follow the required steps.

Further Student Loan Forgiveness Reading

5 Crucial Takeaways After Court Halts Student Loan Forgiveness

Court Temporarily Blocks Biden’s Student Loan Forgiveness Plan — Here’s What It Means For Borrowers

In Reversal, Biden Administration Announces New Eligibility Limits On Student Loan Forgiveness

Applying For Student Loan Forgiveness? Don’t Make These 3 Mistakes

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