US President Joe Biden speaks from the Roosevelt Room of the White House in Washington, DC, on March … [+] 11, 2022. (Photo by MANDEL NGAN / AFP) (Photo by MANDEL NGAN/AFP via Getty Images)
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Last week, the Biden administration announced that it had identified 100,000 borrowers who will qualify for $6.2 billion in student loan forgiveness — the latest wave of relief that the administration is providing to distressed borrowers.
But the loan forgiveness has been preliminarily approved under a specific program with specific eligibility criteria. Here’s who qualifies.
Public Service Loan Forgiveness (PSLF) and the Limited Waiver
The administration’s announcement last week was about the the Public Service Loan Forgiveness (PSLF) program. PSLF, which first created in 2007, is a federal loan forgiveness program that can allow borrowers to eliminate their loans after 120 “qualifying payments” over 10 years (or more).
The original PSLF eligibility rules that defined a “qualifying payment” were a bit confusing for borrowers. These issues were exacerbated by poor communication by loan servicers, and inadequate oversight by the Department of Education. Under these original rules, a qualifying PSLF payment was one that was made:
On a Direct federal student loan. Payments made on other federal loans, like older FFEL-program loans and federal Perkins loans, did not qualify.
Under an income-driven repayment plan or the 10-year Standard repayment plan. Payments made through other plans, like the Extended or Graduated repayment plans, did not count.
While working as a full-time employee for a qualifying nonprofit organization or public entity. Part-time employment could count as well, as long as the borrower has at least two qualifying public service employers and their combined hours are at least 30 per week on average.
Because of PSLF’s problems, the program long suffered from low approval rates. So the Biden administration created a temporary fix last October called the “Limited PSLF Waiver” program, or “waiver” for short. Under the waiver, the Education Department is temporarily changing two of the three PSLF rules:
Past periods of repayment on FFEL loans and Perkins loans can be counted, provided that the borrower consolidates those loans under the federal Direct consolidation loan program (if they haven’t already done so) to “convert” those non-Direct loans into a Direct loan.
Any repayment period can qualify for PSLF under the waiver, regardless of the repayment plan, whether the payments were made in full or on time, and whether the payment was made before or after Direct loan consolidation.
Automatic Student Loan Forgiveness Under the PSLF Waiver For Some Borrowers
The Education Department has indicated that many borrowers may qualify for student loan forgiveness or updated counts of qualifying PSLF payments automatically through the waiver if they have already consolidated their non-Direct federal loans into a Direct consolidation loan and submitted required forms certifying their public service employment. The Department has said that Federal Student Aid staff will be reviewing borrowers’ accounts and updating their PSLF payments in accordance with the PSLF Waiver rules. The vast majority of the 100,000 borrowers who qualify for the lates wave of student loan forgiveness likely fall within this category.
Other Borrowers Will Need to Take Steps To Qualify for Student Loan Forgiveness Under the PSLF Waiver
Not all of the student loan forgiveness through the waiver will be automatic, however. Borrowers who still have FFEL loans and Perkins loans and will benefit from the waiver would need to consolidate those loans via the federal Direct consolidation loan program. And borrowers who have not yet certified their employment by submitting the PSLF Employment Certification forms would need to do so.
The PSLF Waiver is temporary, and expires on October 31 of this year. So borrowers who need to take certain steps have a limited time window within which to act. The Education Department has established a detailed website with guidance on who qualifies for the PSLF waiver, and how to apply. Officials have estimated that hundreds of thousands of additional borrowers may ultimately receive, or get much closer to, loan forgiveness.
Education Department Updates PSLF Waiver Guidance
For borrowers who need to consolidate their federal loans via the federal Direct consolidation loan program to qualify for the PSLF waiver, the Department of Education recently updated its guidance to explain how payments will be counted.
According to the new guidance, “Assuming that your repayment history overlaps for each loan [that is being consolidated], the consolidation loan will be credited with the largest number of payments of the loans that were consolidated. For example, if you had 50 qualifying payments on one Subsidized Stafford Loan and 100 qualifying payments on another Subsidized Stafford Loan and you consolidate those loans, you will receive 100 qualifying payments on the new Direct Consolidation Loan. If your repayment history does not overlap for each loan, the consolidation loan may be credited with more than the loan with the largest number of payments.” This may allow many more borrowers to reach the loan forgiveness threshold.
Further Student Loan Reading
Biden May Extend Student Loan Pause And Is Considering Loan Forgiveness, Says White House Official
Denied Student Loan Forgiveness? Biden Administration Unveils Appeal Process
Thousands Of Jobs Qualify For Expanded Student Loan Forgiveness Program
4 Signs That Student Loan Cancellation Isn’t Off The Table