Who is eligible and how to apply for Biden’s relief extension
The Biden administration this week announced sweeping changes to the Public Service Loan Forgiveness (PSLF), a key federal student loan forgiveness program that has become mired in trouble and low approval rates since its inception. creation.
The administration is relaxing key requirements that limited PSLF eligibility for certain types of federal student loans and certain repayment programs. The result will be a significant expansion of the program that could ultimately benefit nearly 600,000 student loan borrowers, according to the Department of Education.
Here is an overview of the new changes to the PSLF program, including who may be eligible and how to request relief.
All repayment plans will now be eligible for Public Service Loan forgiveness (PSLF)
The Education Department has indicated that under the new changes, payments made under any repayment plan can now count as an eligible payment for the PSLF. “All previous payments made while you were working for an eligible employer will count as an eligible payment, regardless of loan type or repayment plan,” the Education Department said.
Previously, only payments made under an income-based repayment plan or the standard 10-year repayment plan could be considered an eligible payment. Payments made under extended repayment plans, progressive repayment plans and other fixed or level plans with durations greater than 10 years have been excluded. From now on, payments made under these plans will count, as long as the borrower was in qualifying PSLF employment at the time the payment was made.
It is important to note that the changes are retroactive to the creation of the PSLF program in October 2007, but not before that date. Thus, payments made before October 2007 still cannot be counted in the PSLF. Most periods of non-payment, including school postponements, abstentions from hardship and periods of non-payment, will still not count towards the PSLF.
Payments made on non-direct federal student loans – including FFEL loans – may now be eligible for PSLF
The department is also relaxing the PSLF criteria that limited eligibility to payments made on direct federal student loans only. Payments made on other types of federal student loans, such as Perkins loans and old FFEL program loans, have not historically counted as eligible PSLF payments. “Counting past payments on additional loan types will be especially important for borrowers who have or have had Federal Family Education Loan Program (FFEL) loans,” the Education Department wrote in its announcement. . “About 60% of borrowers who have certified jobs for PSLF fall into this category.”
Under the new changes, the ministry will account for payments made on non-direct federal student loans, including FFEL loans and Perkins loans, to the PSLF, provided the borrower was in qualifying PSLF employment when those payments were made. carried out. The borrowers would still need to consolidate these loans through the Federal Direct Consolidation Loans program to get the benefit.
However, some loans will still not be eligible for the PSLF. For example, payments made on private student loans and payments made on Parent PLUS loans prior to the direct loan consolidation will still not qualify.
Payments made before direct loan consolidation may be taken into account for the PSLF
Another major change implemented by the Department is to account for payments made before the consolidation of direct loans to the PSLF. Historically, loan consolidation “reboots” the timer over a borrower’s repayment term, including for PSLF purposes.
Consolidation will always restart the clock over a borrower’s broader repayment term (something to be aware of), but now the ministry will allow payments made prior to direct loan consolidation to be counted in the PSLF, provided that the borrower was in qualifying employment at the time the payments were made. “Payments prior to a direct loan pool are … covered” by the changes, the ministry wrote in its announcement.
As noted above, however, payments made on Parent PLUS loans prior to the direct loan consolidation will still not qualify for the PSLF.
PSLF payments rejected for technical reasons will be reinstated
The Department will also take action to reverse chargebacks due to technical details. “Too many payments are not counted for the PSLF due to technical requirements regarding borrowers’ choice of payment plan, timing and amount of payment,” the ministry wrote. “In some cases, borrowers ran out of credit with PSLF because their payments were staggered by a cent or two or just a few days.
The ministry will be performing an audit over the next few months and said it will automatically adjust eligible PSLF payments for borrowers who have been unfairly rejected due to these kinds of technical details.
Special modifications to the PSLF for the military
The ministry also announced sweeping changes to the PSLF for military service members. The Biden administration “will allow months spent in active service to count towards the PSLF, even if the service member’s loans were deferred or withheld rather than active repayment,” which is generally a requirement for the PSLF. “This change ensures that members of the military will not need to focus on their student loans while serving our country.”
The Department will also take steps to automate PSLF registration for military service members and federal government employees.
How to request relief under the extended PSLF
The Ministry calls the changes to the PSLF program a “limited PSLF waiver” which is implemented using emergency executive power. As a result, there is a limited window of time during which relief can be offered: one year, and the deadline is October 31, 2022.
The Department will automatically provide part of the relief. For example, the Department has indicated that it will automatically adjust payments that have been rejected due to identifiable technical details.
For other borrowers, however, action may be necessary. Borrowers who have not consolidated their FFEL and Perkins loans, for example, will need to consolidate their loans through the Federal Direct Consolidation Program by October 31, 2022 to obtain prepayments on those loans to be considered in the PSLF. . Prior to consolidation, borrowers must be absolutely certain that their employment for the required period would be eligible for the PSLF.
Borrowers who already have all Federal Direct Program loans will either need to apply for a student loan waiver under the PSLF by October 31, 2022 (if they have made the required 120 total payments), or they will need to certify their employment under the PSLF. date to benefit from the exemption of the PSLF.
The ministry said it would release more information in the coming weeks to help guide borrowers.
Biden to transform civil service loan forgiveness with huge changes: key details
What Navient and FedLoan borrowers should know as major changes in student loan service loom
These student loans are excluded from Biden’s forgiveness and loan relief programs – here’s why
Biden administration describes potentially sweeping changes to student loan forgiveness and repayment programs