THE PUBLIC SERVICE LOAN FORGIVENESS (PSLF) LIMITED WAIVER: WHAT YOU NEED TO KNOW (Updated July 2022)

Last October, the Department of Education announced an overhaul of the PSLF program, which is expected to improve the PSLF status of over one million borrowers… including many of you and your staff. To date, over 130k borrowers have had over $8 billion forgiven, and we’re just getting started: There’s over $130 billion in debt for 1.3 million borrowers in the 10-year queue!

If you’ve been working in Public Service and you have student loan debt, this post is for you as we’re going to explain what the waiver means, who qualifies, and what action items need to be taken. As you (hopefully) know, PSLF was created in 2007 with three core requirements that must be met simultaneously for ten cumulative years:

1. You must have Direct Loans.
2. You must use a qualifying repayment plan (almost always an Income-Driven Repayment (IDR) plan.
3. You must work full-time for a qualifying organization.

For borrowers who took out federal loans before July of 2010 (when Direct Loans become everyone’s lender), PSLF was not previously available on the majority of federal loans unless they were consolidated to Direct Loans. Additionally, the IDR plans were not popular when they were first made available, nor were they effectively promoted by schools and servicers. Therefore, many borrowers either didn’t know about PSLF, or were making errors in their pursuit of it.

To retroactively fix these issues, the PSLF Limited Wavier was created last October. The loan type and repayment plan requirements for PSLF were loosened to include payments made on ANY Federal student loan while working full-time in a qualified environment since the program’s inception in 2007. Read on to learn about the changes and if you might need to take action:

1) ANY past payment on FFEL and Perkins loans made before October 2021 will qualify for PSLF, as long as those loans are consolidated to Direct Loans by 10/31/2022. This was later expanded to include periods of forbearance that were 12 months or longer, or 3 cumulative years.

2) Any plan payments made that were not counted towards PSLF due to being late or in the wrong payment plan will be considered qualifying payments.

#1 is certainly the most significant change for most borrowers who previously were told they didn’t qualify. That said, if you’re pursuing PSLF (or wish to), consolidated all of your loans to Direct Loans right after you graduated, and have been using an Income-Driven Repayment (IDR) plan since, you need not take any action.

However, if you have FFEL and/or Perkins loans, or are unsure if you’ve made qualifying payments in the past, please follow these steps:

First, find out if you qualify for additional payments by logging into www.studentaid.gov and viewing your aid summary. Expand out all of the options and see if you took out any loans that DO NOT begin with the word “Direct”. If you find some, you may qualify.

If you HAD FFEL or Perkins loans, but have since consolidated them:

Did you work in a qualifying setting and make payments on these loans? If so, have you ever submitted an Employment Certification Form (ECF) for that time period? If so, you may receive automatic credit in the next few months. If not, complete the ECF using the PSLF Help Tool and send it to the applicable employer(s).

If you still have FFELL or Perkins loans:

Consolidate your FFEL Program loans and Perkins Loans into a Direct Consolidation Loan by Oct. 31, 2022. We suggest doing this ASAP using the PSLF Help Tool to guide you towards the loans that must be consolidated. This is important, because you cannot receive credit for payments under this limited-time period if you consolidate after that date. After the consolidation is complete, you’ll then use the Help Tool to submit a PSLF form to complete your Employment Certification on those loans.

If you made any payments on a Direct loan, submitted an ECF, and were told they are not qualified due to your payment plan or because they were late:

-Do nothing. You should be awarded credit in the coming months.

If you made any payments on a Direct loan, but have not completed an ECF:

It’s time to do that! Start with the PSLF Help Tool, and be sure you have your employer’s EIN number handy.

While we’re on the topic of PSLF, check out our interview with a recent physician PSLF recipient!

About Author

Jason DiLorenzo

Jason is the Founder of BenElevate, an early stage fintech company working to address the student debt crisis by bringing to bear tools, expertise, and bespoke solutions to streamline student debt management for borrowers and employers.