In the fall of 2021, the Public Service Loan Forgiveness Program was overhauled by the Biden administration. Since then, thousands of borrowers have received $8.1 billion in student debt relief.
But many others who may be eligible for the program under a temporary waiver are running out of time to apply for loan forgiveness.
The Public Service Loan Forgiveness program, or PSLF, was created in 2007 with the intention of helping employees with nonprofit and government agencies by forgiving their student loans after 10 years of payments (120 total payments). The overall approval rate among applicants has been low – just 1 in 5 of the 1.3 million borrowers pursuing debt discharge through PSLF were on track to see relief by 2026, according to a September 2021 report from The Washington Post.
In 2021, the U.S. Department of Education announced a change that temporarily waives specific PSLF requirements to grant borrowers credit toward loan cancellation regardless of their federal loan type or if they had been enrolled in a specific payment plan, as long as they consolidated their debt before the end of the waiver.
Before the waiver, borrowers needed to have a specific federal loan – a Direct Loan – to qualify for PSLF. Borrowers could consolidate their debt into Direct Loans for PSLF, but any payments made on the loans before consolidation didn’t count toward the required tally.
This waiver is currently set to expire after October 31, 2022, meaning eligible borrowers have only about four months to apply. Richard Cordray, the head of Federal Student Aid, said at a conference earlier this week that while he is pushing for the PSLF waiver to be extended, President Biden may lack the executive authority to approve such a move.
A recent report from the Student Borrower Protection Center found over nine million public service workers likely qualify for debt cancellation through the PSLF program, but have yet to file the paperwork to start the process. California, Texas, Florida, and New York have the most public service workers with student loan debt, according to SBPC.
As explained above, PSLF is intended to give eligible public service employees debt forgiveness after a set number of payments are made.
Eligible borrowers must:
- Be employed by a U.S. federal, state, local, or tribal government or not-for-profit organization (federal service includes U.S. military service)
- Work full-time for that agency or organization
- Have Direct Loans (or consolidate other federal student loans into a Direct Loan)
- Make 120 qualifying payments
Under the current PSLF waiver, eligible borrowers can receive credit for payments made on other loan types, under any payment plan, before consolidation, or after the due date. Those who received Teacher Loan Forgiveness can apply the period of service that led to their eligibility toward PSLF, if they can certify PSLF employment for that period.
The first step in determining your eligibility is visiting the FSA’s website and logging into your account. You’ll be able to search your employer within the FSA’s database and add information about your employment. Once you find your employer, you’ll be able to see whether it qualifies under PSLF.
Next, according to SBPC’s walkthrough guide, you’ll want to determine which type of federal student loans you have. Direct Loans are eligible for PSLF while other loans need to be consolidated into a Direct Consolidation Loan. Until the end of October 2022, previous qualifying payments you’ve made on a non-Direct Loan will count for the necessary 120 payments PSLF requires for forgiveness.
Once you’ve completed the steps above, you’ll need to confirm your employment. You should then be able to submit your PSLF form.
The FSA has created a help tool to guide borrowers through completing the form.
Who qualifies for the already-approved student loan forgiveness?
While widespread student loan forgiveness hasn’t yet become a reality, some U.S. borrowers have already received some debt relief. Roughly 1.3 million borrowers have seen $26 billion in student debt forgiveness since President Biden took office.
In addition to the thousands of borrowers that have received debt cancellation under the revamped PSLF program, another 690,000 borrowers have had a total of $7.9 billion in student loans erased through discharges due to borrower defense and school closures. Over 400,000 borrowers have received more than $8.5 billion in debt forgiveness through total and permanent disability discharge.
Last month, the Biden administration agreed to cancel $6 billion in federal student debt for roughly 200,000 borrowers as part of a proposed class-action settlement. The borrowers claim their college defrauded them and their applications for relief from the Department of Education were delayed for years.
Biden is expected to announce his plans regarding more widespread student debt forgiveness in July or August.