Borrowers are finally starting to get their student loans forgiven under a new expanded program recently announced by the Biden administration.
Biden’s Expansion Of Student Loan Forgiveness Program For Public Service Workers: A Breakdown
Last month, the Biden administraiton announced a new expansion of the Public Service Loan Forgiveness (PSLF) program, which can wipe out the federal student loan debt for borrowers after 10 or more years of qualifying public service employment for nonprofit or public organizations.
Historically, the PSLF program has had confusing eligibility criteria, and it has suffered from low approval rates for years. But under the new “Limited PSLF Waiver” program, announced by the Education Department on October 6, the administration will temporarily relax some of the PSLF program requirements, allowing borrowers who made payments on non-Direct federal student loans (the “wrong” kind of loan, such as FFEL or Perkins loans), or under a non-income-driven repayment plan (the “wrong” kind of repayment plan) to potentially get those payments counted. The Department also will count payments that were previously rejected on technical grounds, such as timeliness.
Borrowers Are Starting To Receive Student Loan Forgiveness Under Expanded PSLF Program
This week, thousands of borrowers have started receiving notices that their federal student loans have been forgiven under the Limited PSLF Waiver program. A Department of Education source confirmed that approximately 10,000 borrowers have received $715 million in student loan forgiveness. Another 20,000 borrowers are expected to receive an additional $1.2 billion in student loan forgiveness soon.
The Department had previously said that for Direct loan borrowers who have already certified their employment for the PSLF program, officials would be reviewing borrower accounts for rejected payments, and would adjust a borrower’s total number of qualifying payments accordingly.
Melissa, a borrower in southern Illinois (she declined to provide her last name), was notified on November 8 that her $84,000 federal student loan balance had been forgiven under the Limited PSLF Waiver program. Melissa had initially consolidated her federal loans via the FFEL program; she did not know at the time that FFEL loans are ineligible for PSLF. She had to re-consolidate her loans through the Direct consolidation loan program in 2012 to qualify for PSLF — but none of the payments she made between 2007 and 2012 would count, even though she had been working for state government during that time. “I was in a state of disbelief that none of the previous years of payments would count,” she said.
Under the Limited PSLF Waiver program, however, her pre-2012 payments on her FFEL loans would count towards the 120 “qualifying payments” that are required to obtain loan forgiveness. Since she had already certified her employment with the Department of Education, the Department could start applying those payments. But nothing happened for weeks, so Melissa filed a complaint with the Department of Education directly. This week, her $84,000 balance was finally cancelled. Melissa’s loan balance had actually grown from $70,000 in 2012 to $84,000, despite making $16,000 in payments.
Melissa thought this would never happen. “I have three kids… and am starting to think about how we will pay for their college, and having this time to save for them instead of continuing to pay on my loans is huge,” she said.
Other borrowers have been reporting similar experiences this week. On a Reddit thread, dozens of borrowers shared stories of getting their federal student loans forgiven under the new Limited PSLF Waiver. “$153k forgiven as of this morning!” said a user named No-Contract-586. “No letter or email yet but account says paid in full/balance $0.”
“$106k forgiven,” said user Writtenbyrabbits. “Original loan amount $80k. Paid for 15 years. And my balance was $106k yesterday morning. Hallelujah.”
Other Borrowers Will Need To Take Action To Get Their Student Loans Forgiven Under the PSLF Waiver
While the Department has provided this relief automatically to borrowers who qualify, for many other borrowers, some form of action will be required to get their student loans forgiven under the Limited PSLF Waiver. Borrowers who still have FFEL-program or Perkins loans will likely need to consolidate those loans through the federal Direct consolidation program, and then submit a PSLF Employment Certification. Meanwhile, Direct loan borrowers who have not certified all of their past and present public service employment will need to submit PSLF Employment Certification forms, as well. Borrowers must act before October 31, 2022.
The Department has not released full details regarding how it will continue to implement the Limited PSLF Waiver program in the coming months, particularly for borrowers who have to consolidate their loans or take other steps prior to October 31, 2022. Earlier this week, Department officials promised that they are still working on rolling out the benefits of the program, and would release more information in the coming weeks and months. In the meantime, the Department’s current guidance can be found here.