To qualify for Public Service Loan Forgiveness (PSLF), a borrower generally must make 120 qualifying monthly payments under a qualifying repayment plan, while working full-time for a qualifying employer. On October 6, 2021, the U.S. Department of Education (the Department) announced substantial changes to these requirements due to the COVID-19 pandemic.1 The Department implemented a Limited PSLF Waiver to count all prior payments made by student borrowers toward PSLF. The limited waiver helps address the effects of the pandemic on student loan borrowers by making it easier for borrowers to repay their federal student loan debt.
What Does The Limited Waiver Change?
The limited waiver runs through October 31, 2022. Under the limited waiver, any period of repayment will count as a qualifying payment, regardless of loan program, repayment plan, or whether the payment was made in full or on time. Even partial loan payments or late loan payments will count towards forgiveness. The waiver also permits the inclusion of Federal Family Education Loans (FFEL) and Perkins Loans towards the PSLF requirement of 120 qualifying monthly payments. This is noteworthy as nearly 60% of borrowers who had previously certified employment for PSLF had loans from the FFEL program. Usually, only Federal Direct Loan (“Direct”) repayments were eligible for PSLF and any payments made on any other federal loans prior to consolidation didn’t count. However, under the limited waiver, if borrowers consolidate their FFEL and Perkins loans into a Direct Loan before October 31, 2022, they may receive credit for payments made on those loans prior to the consolidation.
Some Rules That Haven’t Changed
To qualify for PSLF, borrowers are still required to make 120 payments; be employed by a government, 501(c)(3) non-profit or other non-profit organization that provides a qualifying service; work full-time; and have direct loans or consolidate into a direct consolidation plan. Remember, private loans are never eligible for PSLF. All in all, the PSLF program has not changed in the long term; if you expect to get PSLF after October 31, 2022, borrowers will still need to be enrolled in an income-driven repayment plans and make payments on Direct loans. For further information, please read our article on Public Service Loan Forgiveness.
Suspended Payments Count Towards PSLF During the Covid-19 Administrative Forbearance
If borrowers have a Direct Loan and they work full-time for a qualifying employer during the forbearance, then they will receive credit toward PSLF for the period of the forbearance as though they made monthly payments. Student loan payments have been suspended since the start of the COVID-19 pandemic and are set to resume on January 31, 2022. This means that qualifying borrowers will receive credit for nearly 20% of their required 120 monthly payments even without making a single payment towards their student loan debt. To receive credit for these qualifying payments, borrowers must submit a PSLF form certifying their employment during the suspension period. If the borrower has already applied for PSL and had their employment certified, the Department will award the additional payments without any further action from the borrower.
Let Gordon Delic & Associates Help with Your Student Loan Forgiveness
The attorneys at Gordon, Delic & Associates can help ensure that you qualify for this great new program. We encourage you to get in contact with our office as soon as possible so that we may complete the necessary documents before the October 31, 2022 deadline.
Contact us or call us at (208) 900-9509.