On Oct. 6, 2021, the U.S. Department of Education announced temporary changes to the PSLF program rules as a result of the COVID-19 national emergency. For a limited time, borrowers may receive credit for past payments made on loans that would otherwise not qualify for PSLF.
“The Department of Education is announcing a set of actions that, over the coming months, will restore the promise of PSLF,” reads a statement from the Department of Education.
“We will offer a time-limited waiver so that student borrowers can count payments from all federal loan programs or repayment plans toward forgiveness. This includes loan types and payment plans that were not previously eligible. We will pursue opportunities to automate PSLF eligibility, give borrowers a way to get errors corrected, and make it easier for members of the military to get credit toward forgiveness while they serve. We will pair these changes with an expanded communications campaign to make sure affected borrowers learn about these opportunities and encourage them to apply.”
If you are currently employed in public service or have been previously enrolled in the PSLF Program, you may be eligible for additional qualifying payments towards student loan forgiveness.
New Rules for Qualifying Payments
Under the new rules, any prior payment made will count as a qualifying payment, regardless of loan type, repayment plan, or whether the payment was made in full or on time. This means that the borrower did not have to make the payment within 15 days of the due date to count as a qualifying payment. All that is required is qualifying employment.
This change will apply to student loan borrowers with:
Those who have already consolidated into the Direct Loan Program, and
Those who consolidate into the Direct Loan Program by Oct. 31, 2022.
NOTE: Parent PLUS loans are not eligible under the limited PSLF waiver.
Two requirements to receive additional qualifying payments:
1. Full-time Qualified Employment
You must have worked full-time for a qualifying employer when prior payments were made. If you were employed in more than one qualifying part-time job at the same time, you will be considered full-time if you worked a combined average of at least 30 hours per week. You can receive credit only for payments made after Oct. 1, 2007, since that is when the PSLF Program began.
If you haven’t already, you must file a Public Service Loan Forgiveness (PSLF) & Temporary Expanded PSLF (TEPSLF) Certification & Application (PSLF form) for any period for which you may receive additional qualifying payments.
2. Loan Consolidation
If you have Federal Family Education Loan (FFEL) Program loans, Federal Perkins Loans, or other types of federal student loans that are not currently Direct Loans, you must consolidate those loans into the Direct Loan program before Oct. 31, 2022.
The Department estimates the waiver will bring over 550,000 borrowers an average of 23 payments closer to loan forgiveness and make 22,000 borrowers immediately entitled to
the cancellation. The Department also reiterates that the waiver is strictly a “temporary opportunity.”
Military service may be counted as payment
Of note, the new rules will mean that a borrower’s months spent on active duty can be counted toward the PSLF, even if the service member’s loans were on a deferment or forbearance rather than actively in repayment.
“Too often, members of the military find out that those same deferments or forbearances granted while they served our country did not count toward PSLF,” reads the announcement. “This change ensures that members of the military will not need to focus on their student loans while serving our country.”
Some of this new policy appears to still be in development.
“Federal Student Aid will develop and implement a process to address periods of student loan deferments and forbearance for active-duty service members and will update affected borrowers to let them know what they need to do to take advantage of this change,” reads the announcement.
More announcements are expected over the next few weeks regarding program guidelines and requirements.