If you are a federal student loan borrower, you are no stranger to how complicated it can be to navigate options and strategies for repaying those loans. Last week, the Department of Education announced sweeping changes to the Public Service Loan Forgiveness (PSLF) program in order to make it easier and more efficient for eligible borrowers to access this loan forgiveness. Some of these changes are temporary, however, so borrowers should act soon if they want to take advantage of some of these provisions. I’ll highlight some of the changes below, and add resources that borrowers should look into if you think you might be eligible.
Some background on the PSLF program: In 2007, the Department of Education implemented a new program whereby federal student loan borrowers working in public service (teachers, firefighters, government employees, military service members, etc.) could have their student loans forgiven after 120 monthly payments (essentially 10 years) under qualifying repayment plans. Oh, and only certain loan types are eligible. If it sounds complicated, that’s because it is. In fact, in 2017 when the first borrowers in this program became eligible for forgiveness, less than 1% of those that applies for PSLF were approved. Many of these denials were because of minor technicalities, including errors by the loan servicers.
The newly announced changes to this program aim to address its complicated nature by improving communication with potentially eligible borrowers, making it logistically easier for borrowers to apply and be approved for PSLF, and temporarily waiving some of the requirements so those that should be eligible but for somewhat messy handling of the program so far can access forgiveness immediately or sooner than they otherwise would be able to.
As part of this announcement, the Department of Education promises to do the following:
- Implement a Limited PSLF Waiver to count all prior payments made by student borrowers toward PSLF, regardless of loan program
- What this means: There will now be a temporary waiver on the requirements pertaining to repayment program and loan type, and prior payments that otherwise would not have qualified will now count toward PSLF. Note that the qualifying employer requirement does not change (i.e., you still have to have been employed in public service full time).
- Simplify what it means for a payment to qualify for PSLF
- This basically eliminates some of the minor technicalities that disqualified payments from otherwise—eligible borrowers.
- Eliminate barriers for military service members to receive PSLF
- Military members whose loans were in forbearance or deferment because of active duty responsibilities lost out on PSLF progress. Those periods of forbearance or deferment will now count toward forgiveness.
- Automatically help service members and other federal employees access PSLF
- The Department of Education will work with the military and other federal agencies to match employment data and automatically apply PSLF payment credit to those federal employees and service members that qualify.
- Review Denied PSLF Applications and Identify and Correct Errors in PSLF Processing
- There have been many (justified) complaints about how FedLoan Servicing (the loan servicer in charge of managing the PSLF program) has handled the program. This provision provides for more oversight by the Department and aims to improve the quality of service that borrowers receive.
- Improve Outreach and Communication with PSLF-Eligible Borrowers
- Borrowers that might be eligible for PSLF will receive communication from the Education Department notifying them of this potential and delivering resources to find out more about the program and whether they qualify.
- Simplify the PSLF Application Process
- This includes allowing borrowers to electronically sign their PSLF application and working with qualifying employer groups to automate reporting of a borrower’s qualifying employment.
These changes will be rolling out over the coming months, and federal student loan borrowers should expect to see communication about this. Consider visiting the Federal Student Aid website to make sure that your contact information is up to date so that you’ll be made aware of any changes that affect you in a timely manner.
This page from the Federal Student Aid website goes into more detail on specific situations that eligible borrowers might be in, how these changes affect you, and what you can do to take advantage of the waiver.
If you think you might be eligible for the PSLF waiver under any of these provisions, check out that previously-linked page as well as the PSLF Help Tool.
If you’re not sure whether you might be eligible, or you just want to talk over your student loan situation, please reach out to me and I’ll be happy to discuss it with you. Current clients can use this link to schedule a call with me about your student loans.