Public service workers (including most government and non-profit employees) are generally eligible for federal student loan cancellation after 10 years in repayment through the Public Service Loan Forgiveness Program, but millions have missed out because the program rules are too complex and borrowers haven’t received sufficient information about the program from the Department of Education or their loan servicers. Fortunately, the Department of Education has temporarily relaxed the rules of the program so that many more borrowers can benefit and can get their loans canceled sooner—or even now. But to take advantage of these changes, many borrowers will need to take action by October 31, 2022.
What Is the Public Service Loan Forgiveness Program?
The Public Service Loan Forgiveness (PSLF) Program offers to cancel certain types of federal student loans for people who spend 10 years working in public service jobs and meet the program requirements. Public service jobs include work for the government (e.g., public school teacher, police officer) and many non-profit organizations. The Program cancels any remaining balance of a borrower’s Direct student loans after the borrower makes 120 monthly payments (10 year’s worth) under a qualifying repayment plan while working full-time in a qualifying public service job. Although the work and payments must occur at the same time, the 120 months do not need to be consecutive.
What Are the Benefits of the Limited PSLF Waiver?
Under the limited PSLF waiver, the Department of Education has temporarily waived certain rules of the PSLF Program that have prevented many borrowers from benefiting from the program. For example, many borrowers have been told they are ineligible for the Program because they had the wrong kind of loan, and many did not get credit for all of their time in repayment because they were in the wrong repayment plan or because they consolidated their loans. Borrowers who apply by October 31, 2022 can receive credit toward eventual cancellation for many previous periods of repayment that would otherwise not qualify for PSLF for these and other reasons. This will allow many borrowers to get their loans canceled sooner.
The primary benefits of the waiver are:
- Past periods of repayment on loans that were later consolidated will count toward PSLF.
- Past periods of repayment in any repayment plan will count toward PSLF.
- Past periods of repayment where payments were late or for less than the amount due will count toward PSLF.
- Past forbearance periods of 12 consecutive months or greater, or 36 cumulative months or greater will count toward PSLF.
- The period of service for the Teacher Loan Forgiveness (TLF) Program will also count toward PSLF if you submit a PSLF application form for the same period of time
- Borrowers may receive cancellation even if they are no longer employed by a qualifying employer at the time they apply for or receive cancellation.
- Past periods of repayment made on Federal Family Education (FFEL) Program loans and Perkins loans will count toward PSLF but only if a borrower consolidates these loans into a Direct Consolidation Loan and applies for PSLF before October 31 (discussed in detail in the next section).
What Should Borrowers Do To Take Advantage of the PSLF Waiver?
Borrowers must take action to ensure that they receive the benefits of the limited PSLF waiver. All actions must be taken before the waiver deadline of October, 31, 2022.
- Step 1: Determine if your current or past employment qualifies you for PSLF. A qualifying public service employer includes governments, 501(c)(3) non-profit organizations, and certain other non-profit organizations. Borrowers can use the PSLF Help Tool to check the eligibility of an employer.
- Step 2: Verify the type of loans you have. Borrowers can log in to studentaid.gov to check the type of loans they have. FFEL, Perkins, and Direct loans are all eligible for the PSLF waiver benefits, but different loans require different actions. Borrowers with Parent PLUS loans can also benefit, but only they also have federal loans they took out for their own education, too. Borrowers who only have Parent PLUS loans cannot benefit from the waiver. More information on how the limited PSLF waiver impacts Parent Plus borrowers can be found here.
- Step 3: If necessary, consolidate your loans into a Direct Consolidation Loan. Consolidation is the process of taking out a new Direct Consolidation Loan to replace existing loans. Borrowers can consolidate their loans on studentaid.gov. Detailed instructions on how to consolidate can be found here. Two groups of borrowers should consider consolidation:
- FFEL or Perkins Loan Borrowers: FFEL loans and Perkins loans must be consolidated into a Direct Consolidation Loan to benefit from PSLF, and borrowers must submit an application to consolidate by October 31, 2022 to qualify for PSLF waiver benefits. The new Direct Consolidation Loan will then be credited with as many qualifying PSLF payments as whichever previous loan had the most months in repayment before consolidation. Borrowers should submit a PSLF form at the same time as they are applying to consolidate their loans.
- Direct Loan Borrowers: A borrower with multiple Direct loans from different periods of time may want to consider consolidating their Direct loans into one Direct Consolidation Loan by October 31, 20222 because the new loan will be credited with as many qualifying PSLF payments as the oldest Direct loan had accrued. Thus, the new Direct Consolidation Loan could be entirely forgiven sooner.
- Step 4: Submit or generate a PSLF Form (also called an Employer Certification Form) before October 31st, 2022. Borrowers must submit a PSLF form that reflects any period of work for a qualifying employer since October 2007, when the PSLF program began. Borrowers can get the form online, from loan servicer MOHELA, or using the PSLF Help Tool. Borrowers will need their employers to sign the form to verify their periods of employment, and submit that form. [Update 9/16/22] Because some employers are behind in processing employer certification forms, the Department of Education says that borrowers can still make the waiver deadline if they use the PSLF Tool to generate a PSLF form by October 31, 2022, so long as they submit that signed form as soon as possible afterwards and it is approved. Borrowers must submit a PSLF Form for every qualifying public service employer they have worked for during their time in repayment since October 2007. Borrowers who are trying to consolidate their loans can and should submit a PSLF form while their consolidation application is being processed.
What If a Borrower Was Previously Denied Relief Under PSLF?
Borrowers who were previously rejected for PSLF, either entirely or for certain repayment time periods, can apply again during the waiver period. Borrowers should ensure that all previously submitted PSLF forms were accurate and complete and submit a new application (an employer certification form) if they were denied before October 2021. Borrowers must submit a new application for any periods that were denied before October 31, 2022.
Have Questions? Need More Information?
More information on the limited PSLF waiver can be found on the Federal Student Aid website on the waiver. In addition, a detailed FAQ page has been compiled on the waiver and the PSLF Program more broadly. Borrowers can also consult this step-by-step guide by unions and advocacy organizations on what they need to do to access the PSLF waiver benefits.