The US Department of Education recently released a statement on the Federal Student Loans Service website, myFedLoan.org, this should be noted by anyone with a federal student loan who works full-time for a nonprofit, government, or other public agency (Veterans are also eligible). In part, the online review States:
The Department of Education (ED) has announced a temporary change to the rules for the Public Service Loan Forgiveness (PSLF) Program (Limited PSLF Waiver) which, for a limited time, may allow you to obtain credit for payments that would normally not be eligible for PSLF.
Borrowers may have recently been notified of updates to their eligible payment counts. If notified before February 7, 2022, the update may not fully reflect the implementation of the limited PSLF waiver.
Last November, I wrote for NPQ on President Joe Biden’s administration’s efforts to fix what has been a hugely dysfunctional PSLF program. But as the statement above indicates, the process is evolving. The waiver program was announced last October, but the most recent changes were made in February 2022. Loan forgiveness – or lack thereof – is in play for hundreds of thousands of non-profit employees. not-for-profit and government organizations across the country.
The waiver program was a long time coming. This gives hope to many former students who work in the public sector or non-profit jobs – and who were promised debt forgiveness in exchange for accepting these positions – to finally get out of their debts. The measure that created the right of public sector employees and nonprofit organizations to have their student loan debt forgiven after making 10 years of payments received broad support. Congress passed the law in 2007 by a vote of 292 to 97 in the House and by a margin of 79 to 12 in the Senate; the bill was signed into law by President George W. Bush.
Yet the loan forgiveness was a broken promise. A survey by the California Association of Nonprofits (CalNon-profit organizations) found that currently 23% of staff at nonprofit organizations across the country have outstanding student debt of $90,000 or more.
Overall, more than 550,000 people asked for forgiveness through the PSLF program, but few got it. According to the Education Data Initiative, a nonprofit research group, “Before November 2020, 0.7% of eligible borrowers eventually received student loan forgiveness. In short, less than two years ago, not even one percent of those eligible for forgiveness had received it. Payments may have been disqualified because the borrower had the wrong loans or for using the “wrong” payment plan. Out of four possible payment plans, only two are eligible.
The Biden administration’s measure allows — for a limited window only, ending in October 2022 — federal student loan borrowers who made payments through the two “wrong” plans to treat those payments as if acted of payments in the “law” (qualifying ) of the plans.
And if you fail apply within this limited window? Hard cookies. It’s a return to the old standard of bureaucratic disqualification.
In response to this situation, CalNonprofits recently held a free and comprehensive informational webinar to explain who will benefit from the new waiver program and the crucial steps to qualify for this time-limited opportunity. The recording of this webinar is available at Youtube.
In this webinar, Ashley Harrington, Senior Advisor to the Chief Operating Officer of the Office of Federal Student Assistance at the U.S. Department of Education, said the waiver program has already begun to make a difference, 70,000 borrowers who have received relief through the waiver program since its inception. was created on October 6, 2021.
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CalNonprofits staff also offered webinar attendees important information take away food:
- Credit will be given for months in which any type of loan was in repayment.
- All student borrowers face the October 31, 2022 deadline, both to consolidate their loans, if they are not direct loans, and to submit the necessary PSLF form.
- To apply, a student borrower must confirm their employer(s) and loan types. Eligible loans must be in the form of direct loans, not Federal Family Education Loans (FFEL) or Perkins Loans. (It is possible to consolidate loans if they are not direct loans and ask for a discount afterwards).
- File a complaint if you are having difficulty taking the necessary steps.
Any time a borrower spent working for non-profits should count, even if there was a break in employment.
The most important thing to remember is that if you have a student loan and work for a nonprofit or one of the covered employers, don’t delay. Go to the FedLoan Websitethe current PSLF servicer, and complete the Certification and Application for Public Service Loan Exemption (PSLF) and Temporary Expanded PSLF (TEPSLF) (PSLF form).
Once the application has been submitted by mail or uploaded to the FedLoan site, the borrower should receive confirmation that it was being processed. . . and the notification that it will take some time. The letter is from Richard Cordray, Chief Operating Officer, Federal Student Aid, and can include this message:
Starting this month, many borrowers will start seeing updated payment counts. Federal Student Aid and your PSLF department work hard to monitor your accounts and make sure you get credit for your progress. The work is colossal. We have to do it in phases. Making all the adjustments may take a few months. Please let us focus on helping you. Give us time and try not to flood our phone lines.
If the number of your payments increases, FedLoan Servicing will send you an update to your account. You will receive an e-mail or letter. It will tell you what actions, if any, you need to take. You can login to FedLoan Borrower Portal to follow the statement of your payments. This is the best way to check your status.
If the borrower still has payments to make for the required 120 payments, the waiver is permanent. In other words, borrowers can remain in any payment plan they are currently in until they make the payments required to qualify for debt cancellation.
Caution : don’t wait for the october deadline. As already stated, the application process takes some time and borrowers must continue to make payments even if they think they are finished. (Overpayments will be returned, in the same monthly installments as they are paid).
A second caveat; print all of your records as a borrower from the FedLoan website, especially your payment history. the Pennsylvania Higher Education Assistance Agency (PHEAA) has been acting as a service agency for the FedLoan program since the PSLF program began in 2007. However, PHEAA is withdrawing from the PSLF service business. The US Department of Education last year announcement that it did not renew the service contract for the PSLF program in fall 2021 and that the Missouri Higher Education Loan Authority (MOHELA) will become the new PSLF servicers. Although it is stated that all recordings will be fully transferred, it is better to be safe than sorry.
Of course, the PSLF only reaches a fraction of Americans with outstanding student loans. All in all, there is more than 43 million people who have federal student loan debt. The movement to cancel this debt is continuing and accelerating. The PSLF program helps only a small fraction of this larger pool. Nonetheless, the waiver program marks an important milestone, both for the people it directly benefits and in helping, at least in a small way, to begin to turn the massive $1.7 trillion student loan ship .
Note: the author uploaded it Certification and Application for Public Service Loan Exemption (PSLF) and Temporary Expanded PSLF (TEPSLF) on January 13 and did not receive the results. If the waiver applies, the number of payments considered for loan cancellation will increase from 73 to 95 out of the 120 payments required.