Temporary Relaxed Regulations for Public Service Loan Forgiveness
Relaxed Regulations Expire October 31
Individuals with federal student loans have until October 31, 2022, to apply to consolidate their loans into a Direct Loan and take advantage of the limited PSLF waiver. Borrowers may receive credit for payments that previously did not qualify for Public Service Loan Forgiveness (PSLF) during this limited window if they worked for a qualified employer and have a Direct Loan.
Learn more about PSLF and who qualifies.
What is Public Service Loan Forgiveness?
In 2007, PSLF was established to forgive federal student loans for borrowers who are employed full-time (30+ hours per week) in an eligible public service organization. Under this program, 10 years of payments must be completed before qualifying for tax-free forgiveness, meaning that the first group of borrowers became eligible for relief in 2017. Among all applicants, only 1.16% were initially approved for.1 A temporary limited PSLF waiver potentially provides more borrowers with relief.
Relaxed Regulations Could Bring Additional Relief to Employees
The U.S. Department of Education announced temporary changes to PSLF to make loan forgiveness accessible to more than 550,000 borrowers.2
Borrowers working a qualifying job for 10 years can apply for loan relief through October 2022, no matter what kind of repayment plan or federal loan program they have.3 That means that many past loan payments that may have been previously ineligible will now count, which could help more people access loan forgiveness. In addition to the 22,000 borrowers immediately eligible to apply for the waiver, as many as 27,000 borrowers could apply to have their debt forgiven if they prove they were working in an eligible job at the time they made their payments.4
Disqualified and Past Payments May Count Towards Forgiveness
In the past, late payments and payments that were slightly off (even just by a few cents) were disqualified but could now be counted as eligible. Also, borrowers had to be enrolled in one of a few specified plans. Under the new rules, past payments ruled as ineligible may potentially count towards forgiveness as well.5 The change will also allow military members to count their time on active duty towards their 10 years of qualifying payments, even if they were not making payments during a given time period.
Steps Towards Relief and Optimism
Over 200 organizations, including some of the nation’s largest teachers’ unions, have been calling on lawmakers to create an easier route to debt forgiveness for anyone who has worked in the public sector for 10 years or more.6 While these changes are temporary, they could allow many people to feel a sense of relief and optimism as the U.S Department of Education begins the process of considering permanent improvements to the overall landscape of federal student loan programs.7
Do you think you may be eligible for relief? Visit the Federal Student Aid website for assistance and use the PSLF Help Tool to learn if you are qualified for forgiveness and the actions you should take.
This blog is up to date as of September 2022 and has not been updated for changes in the law, administration or current events.