October 6, 2021 –
The US Department of Education has revised some rules and made what they term “transformational changes” to the Public Services Loan Forgiveness program, first created in 2007.
In recent years, it has been extremely hard for graduates to get proper loan forgiveness of their Federal Direct Loan(s) for their commitment to work full time in public service for 10 years while making 120 on-time payments to those loans. Reportedly, since 2017 when borrowers first became eligible for the forgiveness, only 2% of participants were being granted the forgiveness(1). That is unacceptable.
According to the press release, some folks will automatically receive the forgiveness, and others may have to supply some additional verification:
This policy will result in 22,000 borrowers who have consolidated loans—including previously ineligible loans—being immediately eligible for $1.74 billion in forgiveness without the need for further action on their part. Another 27,000 borrowers could potentially qualify for an additional $2.82 billion in forgiveness if they certify additional periods of employment.
All told, the Department estimates that over 550,000 borrowers who have previously consolidated will see an increase in qualifying payments with the average borrower receiving another two years of progress toward forgiveness. Many more will also see progress as borrowers consolidate into the Direct Loan program and apply for PSLF, and as the Department rolls out other changes in the weeks and months ahead.
Other changes being made include more leniency on certain certification aspects like, being few days late on a payment, or a few cents under the amount, that formerly would cause someone to be deemed ineligible.
From what we gather, as a Federal Direct Loan borrower, you should not need to do anything special to get your application re-reviewed. The US DOE says it will reach out directly to borrowers. The one thing you CAN do is make sure your contact information is current with them at StudentAid.gov.
Federal Student Aid will make more information available to borrowers at StudentAid.gov/PSLFWaiver. In the coming weeks and months, the Department will communicate directly with borrowers about these changes to PSLF to help borrowers understand how they may benefit and any actions they may need to take. Borrowers should ensure that they have accounts on StudentAid.gov and that their contact information there is up to date.
BUT… if you have a different type of federal loan (Perkins, FFEL, etc.), you are also being included in this order, but need to apply for a waiver by October 31, 2022 — so a year away.
A limited PSLF waiver that allows all payments by student borrowers to count toward PSLF, regardless of loan program or payment plan. This waiver will allow student borrowers to count all payments made on loans from the Federal Family Education Loan (FFEL) Program or Perkins Loan Program. It will also waive restrictions on the type of repayment plan and the requirement that payments be made in the full amount and on-time for all borrowers. To receive these benefits, borrowers will have to submit a PSLF form by October 31, 2022, which is a single application used to certify employment and evaluate a borrower for forgiveness.
Other resources used in this article:
* (1) New Data Shows Most Who Apply To This Student Loan Forgiveness Program Are Denied, Forbes: June 14, 2021
* StudentAid.gov Data Center Loan Forgiveness Program
* US Department of Education Press Release
* US DOE Loan Forgiveness Overhaul Fact Sheet
* NPR story
* How to Qualify for PLSF – US DOE
* Limited PLSF Loan Waiver – Student Aid.gov (for non-Direct Loans)