The Department of Education indicated this week that hundreds of thousands of student loan borrowers may soon benefit from a recent expansion of Public Service Loan Forgiveness (PSLF), a key federal student loan forgiveness program.
“More than a million student loan borrowers could benefit from recent changes to the PSLF Program. You’re one of them, “wrote Richard Cordray, Chief Operating Officer of the Department of Education’s Federal Student Aid office, in a blast email to borrowers this week.
Here’s the latest.
Expansion of Student Loan Forgiveness Under the Limited PSLF Waiver
Public Service Loan Forgiveness (PSLF) allows borrowers to obtain student loan forgiveness after 10 years of employment for qualifying nonprofit or public organizations. The original PSLF rules were complicated and onerous, however. The program’s requirements limit relief to borrowers who have specific kinds of federal student loans (Direct-program federal student loans) which must then be repaid under certain kinds of repayment plans (in most cases, an income-driven repayment plan). Borrowers would have to submit employment certification forms to get their payments counted as “qualifying,” and many reported numerous problems with the certification process. The PSLF program in general has suffered from poor administration and oversight, and the rules and requirements were not always properly communicated to borrowers. The result has been abysmally low approval rates, which never rose above the low single digits.
To address PSLF’s shortcomings, the Biden administration in October announced a sweeping, temporary new initiative called the “Limited PSLF Waiver” program. Under the waiver, the Education Department will – for a limited time – count periods of repayment that otherwise would not have qualified for PSLF, including payments made on non-Direct federal loans (such as FFEL loans and Perkins loans), payments that were made Under non-income-driven repayment plans, and payments that were not made in full or on time, as long as the borrower was working in qualifying employment. According to the Department, so far over 70,000 borrowers have already gotten their loans forgiven under the Limited PSLF Waiver, to the tune of around $ 5 billion in total student loan forgiveness.
More Student Loan Forgiveness Is Coming Under the Limited PSLF Waiver
So far, most of the relief granted under the Limited PSLF Waiver has been awarded to borrowers who were already meeting at least some of the key requirements under the original PSLF program – meaning they already have Direct federal student loans, and already had certified their employment. by submitting the appropriate PSLF application forms. Using information and data already in the Federal Student Aid system, the Department of Education employees were able to automatically update a borrower’s PSLF payment count to credit borrowers with payments that otherwise had been rejected under the pre-waiver rules. The result was a recent wave of student loan forgiveness.
But other borrowers who could benefit from the Limited PSLF Waiver have to take certain steps to qualify. Borrowers who have FFEL loans and Perkins loans would need to consolidate those loans through the federal direct consolidation loan program. And borrowers who have not certified their public service employment by completing and submitting the appropriate PSLF certification form would need to do so (and they must submit a separate form for each of their public service employers). Because this process takes time – 30 to 60 days on average to consolidate, and at least a similar timeframe (if not longer) for employment certification forms to be processed – many of these borrowers have not yet received relief under the waiver, as it’s barely been four months since the initiative was first announced.
But the Education Department expects hundreds of thousands of borrowers to soon benefit from the waiver program, both in the form of bigger qualifying payment counts and outright loan forgiveness for those who see a significant enough adjustment. And officials expect relief to start rolling out in the coming weeks.
“Starting this month, many borrowers will begin to see updated payment counts,” Cordray wrote in the email to borrowers. “Both Federal Student Aid and your PSLF servicer are working hard to monitor your accounts and make sure you get credit for your progress.”
Some borrowers have already started encountering problems in accessing the PSLF waiver. Borrower complaints about misinformation, erroneous processing, and long hold times for customer service calls prompted at least one Biden official to warn student loan companies that they could face “consequences” for any illegal conduct in administering the new student loan forgiveness expansion.
Cordray sought to reassure borrowers in his blast email. “The work is massive,” he wrote. “We must do it in phases. To make all the adjustments may take a few months. Please let us focus on helping you. Give us time. ” Cordray implored borrowers “not to flood our phone lines,” an apparent reference to the reports of hours-long hold times for borrowers trying to get information on the program.
Interested in Student Loan Forgiveness Through the PSLF Waiver? Here Are Next Steps
The Limited PSLF Waiver is only in effect until October 31, 2022. And borrowers who need to take certain steps to qualify – such as by consolidating their FFEL and Perkins loans through the Federal Direct Consolidation program, or submitting the required PSLF employment certification forms – will need to complete those tasks prior to that deadline.
The Education Department has set up a detailed website where borrowers can get more information on the Limited PSLF Waiver program, including steps to apply. The website also has a useful FAQ section where borrowers can get answers to common questions.
The Department of Education has also revamped its PSLF Help Tool, which can provide borrowers with initial insights into whether or not their employment may qualify and to start the process of getting the required PSLF employment certification forms completed.
Further Student Loan Reading
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Student Loan Forgiveness Updates: New Changes Coming In 2022 For Public Service Borrowers
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