Federal student loan repayments have been on hold for more than two years due to the pandemic. As borrowersand before the Public service workers like teachers, nurses, first responders, government employees, and firefighters have the opportunity to get student loan forgiveness.
After changing the rules in October 2021 and again in april this year, the Public Service Loan Forgiveness Program has now forgiven a total of $7.3 billion in student loans for more than 127,000 borrowers, the United States Department of Education announced in early June. During President Joe Biden’s tenure, the department has approved a total of $25 billion in student loan relief since January 2021.
This initiative to help more public servants qualify for student loan forgiveness began last fall when the PSLF program extended debt relief to more teachers, nurses, firefighters and eligible civil servants. Other changes in April improved tracking of borrowers in income-driven repayment plans and those who were improperly placed on forbearance by lenders.
“Borrowers who dedicate a decade of their life to public service should be able to count on the promise of public service loan forgiveness,” US Education Secretary Miguel Cardona said in October. “The system has not delivered on that promise to date, but that is about to change for many borrowers who have served their communities and their country.”
In addition to the expanded PSLF exemption, theuntil August 31, and the Biden administration is exploring for federal student loan holders.
How do you know if you qualify for loan relief through the expanded PSLF program? And how to apply? Here’s everything you need to know about civil service loan forgiveness.
What are the changes to the PSLF program?
The PSLF program, first launched in 2007, was designed to help civil servants repay their loans faster. The program works by providing loan forgiveness to eligible government officials who have made 120 eligible student loan payments. Still nearly 99% of borrowers who applied since 2008 were denied before the October expansion.
Under the PSLF’s new limited waiver program, the Department of Education is making it easier for borrowers to enroll and receive program benefits. These include making it easier to identify and deal with potential errors made by their loan servicers – and expanding the types of loans that will now be eligible for the forgiveness. Another focus will be on improving benefits for service members, including converting time spent on active duty into loan repayment, the department said.
Some restrictions are temporarily relaxed, offering new categories of borrowers the opportunity to receive a discount through loan consolidation. Previously, only direct federal loans were eligible for the PSLF. Now other federal ready such as FFEL, federally guaranteed loans from private lenders, Perkins loans, and those with non-standard or non-income-based repayment plans may be eligible. (Note: the exemption only applies to federal loans – although these make up the vast majority of student loan debt, accounting for more than 90% of the total.)
Borrowers can also receive credit for past payments and periods of employment, such as active military service, for which they would not have qualified in the past.
The limited derogation gives borrowers a full year to apply for the PSLF program under its new terms and greatly expands eligibility. Previously, there were limited options for appealing a denial of a PSLF request, and only 5% of people who applied because PSLF has never benefited from debt forgiveness.
Who is eligible for the PSLF?
To qualify for the PSLF, you must be employed full-time by a U.S. federal, state, local, or tribal government agency—this includes the military—or nonprofit organization. You must have direct loans or other types of federally guaranteed loans that have already been consolidated into direct loans, and you must make 120 qualifying payments (10 years of payments). Examples of eligible borrowers for the PSLF are workers like teachers, nurses, and firefighters who serve their local communities.
Who is eligible for student debt cancellation under the new PSLF terms?
The PSLF has expanded borrower eligibility in the sense that more loan types and payment plans are eligible for forgiveness than ever before, but borrowers who can apply are still limited to public sector workers. Thus, more than 550,000 borrowers already eligible for the PSLF can now benefit from an additional discount. There are several specific ways to meet the requirements and check if you are eligible.
The easiest way to determine if you qualify is to apply for the Limited Waiver. Completing the waiver will help you do things like consolidate different types of loans or certify previous periods of employment for credit.
And even if you suspended your monthly student loan payments during the pandemic, you are still eligible for additional relief from the PSLF. In fact, each suspended payment still counts as an eligible payment toward your goal. So if your payments have been suspended for 22 months, that counts as 22 on-time payments.
How do I apply for a PSLF pardon?
The Ministry of Education has a dedicated tool to guide you in your request for a limited exemption. The deadline to apply for the waiver is October 31, 2022, but the sooner you apply, the better. Some borrowers may not have to do anything to have their loan cancelled, but it’s a good idea to confirm your specific details.
What if I didn’t receive credit for past payments?
In the past, if you made payments but your loan servicer had incomplete or inaccurate records, you had to almost no recourse to counter their claims. Now, with the limited waiver, you can apply for forgiveness and have your payments count towards your debt and forgiveness.
Which loans are eligible for the PSLF?
Previously, only direct loans with a standard or income-driven repayment plan were eligible for PSLF. However, for a limited time, you may be able to receive credit for past payments on federal loans that were not previously eligible for PSLF, regardless of your repayment plan. Borrowers with FFEL, Perkins and other federal loans may need to consolidate their loans through the Direct Consolidation Program by October 31.
What other policy changes should I know about?
The Department of Education said in its statement that it will continue to roll out and update its policies in the coming months as it attempts to get the PSLF program back on track.
Correction, January 25: This article previously stated that private loans would be eligible for student loan forgiveness under the new waiver. It was wrong. In addition to direct loans, only FFEL loans – which are federally backed, but often issued by private lenders – Perkins loans and other federal loans are eligible for the PSLF exemption.