Student Loan Forgiveness: PSLF Forgiveness Ends Oct. 31, But Nonprofit and Government Workers Can Get a Second Chance for Debt Relief


WASHINGTON DC — A waiver that temporarily expands eligibility for the civil service loan forgiveness program expires today, but the Biden administration said on Tuesday it was taking steps to facilitate debt relief for borrowers eligible for the loan. ‘coming.

Many Democrats have called on the Biden administration to extend the PSLF waiver, which targets public sector workers. More than 236,000 borrowers have been approved for more than $14 billion in forgiveness over the past year through the waiver, but more people are expected to qualify.

Instead of extending the waiver, the Biden administration is making permanent changes to the program that will take effect in July 2023. These measures are separate from President Joe Biden’s one-time student loan cancellation plan, which will cancel up to 20,000 $ in students. loans for low to middle income borrowers. This program is currently on hold while a federal appeals court considers a legal challenge to the program.

“Now, as we emerge from the pandemic and the waiver period ends, we are focused on making this program work for the long term,” Education Secretary Miguel Cardona said Tuesday during a briefing. a call with journalists about the PSLF.

The PSLF program forgives any remaining federal student loan debt for eligible government and nonprofit workers after making 120 eligible monthly payments, which takes at least 10 years. The amount of student debt relief is not capped, so PSLF could offer a more generous benefit than Biden’s unique rebate program to those who qualify. Some borrowers may qualify for both relief programs.

But the PSLF program has been strewn with pitfalls. Before Biden announced the temporary changes to the program, many borrowers reached 10 years of repayment thinking they were eligible for cancellation of their remaining debt, but instead discovered they had the wrong kind of loan. or were making payments in the wrong type of repayment plan. . In 2019, the US Government Accountability Office found that approximately 99% of PSLF applications were denied.

The administration is still encouraging eligible borrowers to apply for the PSLF waiver by October 31 to receive debt relief. While many waiver benefits will exist after July 2023, borrowers who no longer work with an eligible employer or who have benefited from the teacher loan waiver, in particular, will still need to apply by October 31.

Permanent changes take effect in July

The Department of Education will officially change some of the PSLF program rules through updated federal regulations, which are expected to take effect in July.

The changes will allow borrowers to receive credit to PSLF on payments that are made late, in installments or in a lump sum. Previous rules only counted a payment as eligible if it was made in full within 15 days of its due date.

Under the new rules, time spent in certain adjournment or abstention periods will count towards the PSLF. These periods include deferments for cancer treatment, military service, economic hardship, and time in the AmeriCorps and National Guard.

The new rules will also simplify the criteria for meeting the requirement that a borrower be a full-time public sector employee. The new standard will consider full-time employment at 30 hours per week. In particular, the change will help adjunct professors at public colleges qualify for the program.

Under the revised regulations, borrowers will receive some credit for past payments when they consolidate older loans into federal direct loans to qualify for the program. Borrowers previously lost any progress toward forgiveness when consolidating. After July, they will receive a weighted average of existing eligible payments to PSLF.

Automatic account updates start in November

The Biden administration also announced on Tuesday that it would begin implementing a policy change announced in April regarding payment recounts and automatically update the accounts of some borrowers.

The one-time updates will begin in November and should bring many borrowers – even those who are not public sector employees – closer to forgiveness.

Some borrowers will have their past payments recounted, correcting past errors in counting payments to discount.

The one-time recount applies to borrowers who are enrolled in what’s called the Income-Based Repayment, or IDR, program. The program, which offers four types of repayment plans, helps borrowers avoid defaults by lowering their monthly payments based on their income and family size. IDR also promises loan forgiveness after 20 to 25 years of payments, depending on the specific plan.

The recount may also result in additional credit towards PSLF if the borrower has certified qualifying employment. Borrowers must be enrolled in an IDR plan to qualify for the PSLF.

For borrowers who do not currently have an eligible Federal Direct Loan, they must apply for consolidation by May 1, 2023 to receive all the benefits of the Single Account Adjustment.


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