A week ago, the Biden administration announced it would adopt transformational changes to the Public Service Loan Forgiveness (PSLF), a federal student loan forgiveness program that has long been plagued by benchmarks. Complicated eligibility and low approval rates.

As part of its new “PSLF Limited Waiver” program, which will be available until October 31, 2022, the Department of Education is temporarily relaxing the initial eligibility criteria that limited the PSLF to certain types of federal student loans and to certain reimbursement programs. By expanding eligibility for more federal student loans – including FFEL program loans – and any type of repayment plan, more than half a million student loan borrowers are expected to move closer to two years or more. from the cancellation of the student loan, with thousands potentially immediately becoming eligible for a full forgiveness of the loan within the next year.

The changes to the PSLF are significant, although it excludes some borrowers from relief. However, the limited PSLF waiver also includes several unique benefits that don’t get much attention. Here is a preview.

Some borrowers may be eligible for repayments after a student loan forgiveness through the PSLF

The PSLF program requires 120 qualifying payments to become eligible for the student loan exemption. With the definition of an “eligible payment” being significantly expanded as part of the new program changes, more people are expected to soon reach the 120 payment threshold. And there will be borrowers who, as a result of the PSLF changes, will drop by far from 120 eligible payments to exceeding 120 eligible payments.

Borrowers who have made more than 120 eligible PSLF payments may be able to obtain reimbursement of their overpayments. According to the Department of Education, “if you have made more than 120 payments on an existing direct loan, you will automatically receive a refund for eligible payments you made in excess of 120”.

Commerce has not clarified, however, whether all payments over 120 must have been made only on an existing direct loan (although Commerce’s original wording suggests the answer is “yes”). For example, a borrower who has made less than 120 payments on a direct loan, but can now account for past payments on a FFEL loan, may exceed 120 total payments. The Department of Education is expected to release further guidelines in the coming weeks or months.

Some borrowers may not need to be in qualifying employment when they receive a student loan forgiveness thanks to new PSLF changes

The PSLF program has traditionally required that once a borrower reaches 120 qualifying payments, they must stay employed in qualifying jobs in the public service after the 120th payment while their PSLF request is being processed. This process could take months. But the borrower was not allowed to quit his eligible job until his PSLF application was approved and the pardon was ultimately granted.

Under the ministry’s new limited PSLF waiver, this requirement has been removed for the duration of the waiver program (until October 31, 2022). Borrowers must still be in qualifying employment when the 120 payments have been made, but they no longer have to continue in qualifying employment when they receive a loan forgiveness, provided they request a loan forgiveness before the October 31, 2022. According to the ministry, “Although, under normal PSLF program rules, you must be employed by an eligible employer when you receive the pardon, this requirement is waived during this limited time opportunity.

Certain periods of deferment will now count for the delivery of the loan under the PSLF

Previously, periods of deferment and abstention – when no payment is due – did not count for the PSLF. Under the original PSLF rules, a borrower was to be repaid under a specific income-based repayment plan.

As part of the limited PSLF waiver, this will change for active duty military service members. The ministry says it “will allow months spent on active duty to count towards the PSLF, even if the service member’s loans were deferred or withheld rather than active repayment.”

Partial payments can now count towards the PSLF

For a payment to count as an “eligible payment” under the original PSLF rules, a payment had to have been made in full and on time. But this rule will be relaxed within the framework of the limited PSLF exemption. According to the Ministry of Education, “Under the new rules, any previous payment made will be considered an eligible payment, regardless of whether the payment was made in full or on time. All you need is a qualifying job.

The ministry has yet to provide further details. For example, if a monthly payment was $ 100, would the Department count both a payment of $ 99 and a payment of $ 2? Initial ministry guidelines suggest the answer is “yes”, but more information is expected to be released in the coming months.

Key points to remember for student loan borrowers

Borrowers should be aware that the huge changes to the PSLF program are a limited time opportunity, available only for next year – until October 31, 2022. Borrowers may need to take certain steps to obtain the benefits of the expanded program. . You can learn more here.

Further reading

Biden to transform civil service loan forgiveness with huge changes: key details

Student Loan Forgiveness Changes: Who Qualifies and How to Apply for Biden’s Relief Extension

These borrowers are excluded from Biden’s new expanded student loan

What Navient and FedLoan borrowers should know as major changes in student loan service loom