U.S. Secretary of Education Miguel Cardona attends a panel discussion . (Photo by Colin … [+]
New America, where the author works, has called for an extension to the PSLF waiver.
The Public Service Loan Forgiveness (PSLF) waiver is meant to make it easier for public service workers to qualify for student loan forgiveness. Unless the Department of Education (ED) decides to extend the waiver, it will end on October 31st.
If you think you qualify for PSLF, you should apply before the waiver ends. You might get credit towards forgiveness for payments made on your loans that did not qualify under the regular rules.
What Is Public Service Loan Forgiveness?
Congress designed PSLF to forgive the student loans of people who hold a public service job and have made at least ten years of payments on their loans. People who work for the federal, state, local or tribal government and most non-profit employees are eligible for PSLF, as are employees of other public entities, like public colleges, schools, and the military. If you are unsure if your employer qualifies, you can check using ED’s employer check tool.
To qualify for PSLF, borrowers must make 120 payments on qualifying loans, generally in an income-driven (IDR) repayment plan, while working for a qualifying employer. The program has faced significant implementation challenges and, until recently, very low approval rates.
How Is The Public Service Loan Forgiveness Waiver Different From the Regular Process?
The PSLF waiver was intended to correct many of the flaws in the PSLF program and increase forgiveness approval rates. It allows payments made while the borrower was not enrolled in an IDR plan to count towards the 120 payments needed for forgiveness. It will also enable some periods of payment deferment to count toward forgiveness. The waiver also allows partial or late payments to count toward the 120 required for forgiveness.
Here is a breakdown of all the differences between the standard PSLF rules and the rules while the waiver is still in place.
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When the waiver was rolled out, ED estimated that over 550,000 borrowers would benefit from the PSLF waiver—either because they would qualify for complete forgiveness or have more payments counted towards forgiveness. So far, over 211,000 borrowers have had their loans forgiven due to the waiver. These numbers make it likely that many borrowers would still benefit from applying for PSLF while the waiver is in place.
Could The Waiver Be Extended?
Congressional Democrats have called on Education Secretary Miguel Cardona to extend the PSLF waiver until new regulations designed to improve PSLF go into force in July 2023. Over 100 members of Congress signed the letter sent to Secretary Cardona. The letter signers rightly suggested that ending the waiver less than a year before new and improved permanent rules for PSLF go into effect will be confusing for borrowers and will limit the number of people who benefit from the changes just as they are proving successful.
Democrats have also introduced a bill, sponsored by Senators Whitehouse (D-RI) and Merkley (D-OR), that would make the current waiver permanent. However, without Republican votes, which are unlikely to materialize, the bill is unlikely to become law. In contrast, Republicans recently introduced a bill that would end the PSLF program entirely, arguing that the program is too costly.
The bill was introduced by Representatives Foxx (R-N.C), Stefanik (R-NY), and Banks (R-IN). The Republican plan would also create a single IDR plan in place of the current four, require all borrowers to make minimum payments of at least $25 a month on their loans, regardless of income, and increase the percentage of discretionary income borrowers have to devote to loan payments.
At present, there have been no indications that the PSLF waiver will be extended. It is of course still possible, but since ED has not indicated it will extend the waiver, it is best for borrowers who might benefit to apply now rather than hoping they will be given more time.
A huge number of changes are happening to the student loan system all at once. These changes should make the system better for students and borrowers. With all the changes, it can be hard to figure out what you might qualify for and how to apply. So, if it is at all possible that you qualify for PSLF, take the time to apply now before the waiver flexibilities disappear.
