On October 6, 2021, the government announced the Limited Public Service Loan Forgiveness Waiver opportunity, which expires October 31, 2022. Federal Student Aid added additional benefits for the PSLF waiver in mid-May 2022 such as allowing certain types of forbearances and deferments to count towards the PSLF program too.
Although the limited PSLF waiver has already helped over 100,000 borrowers receive total forgiveness, this program is exceedingly complicated. You might need to take action as soon as possible to qualify for the PSLF waiver.
We’ve got you covered if you read this guide on what the limited PSLF waiver is and how to qualify.
1. Limited PSLF Waiver Program Rules 2. What is the Public Service Loan Forgiveness limited waiver opportunity? 3. How to get loan forgiveness from the PSLF Waiver 4. Limited PSLF Waiver benefit: Technical payment problems eliminated 5. How many student loan borrowers will benefit? 6. PSLF Waiver Results so Far 7. The Big Danger with the PSLF Waiver 8. Getting help navigating PSLF
Limited PSLF Waiver Program Rules
Here are a few highlights of the PSLF Waiver. We’ll cover the full action steps in this article. Remember you need to react by October 31, 2022, to benefit due to the PSLF Waiver’s expiration date.
- Borrowers with previously ineligible types of loans, most notably Federal Family Education Loan Program (FFELP) loans, now qualify as long as payments were made while employed at a 501(c)(3) or government employer. You must consolidate these loans into the Direct Loan Program with a Direct Consolidation Loan and apply for PSLF to qualify.
- All repayment plans now qualify for PSLF if certified before this PSLF Waiver expires.
- All past payments made before a loan was consolidated now count as well.
- Deferment and forbearance due to active duty deployment will now count toward PSLF for current and former active duty military.
- Before March 13, 2020, if you spent 12 months or more in consecutive forbearance, or 36 months or more in aggregate forbearance, those periods of non-payment could now count towards PSLF
- For any type of deferment before 2013 besides in school deferment, that period could now count. Only economic hardship deferment counts as of January 2013 and after.
- Note that only months on or after October 2007 can qualify for credit towards forgiveness
What is the Public Service Loan Forgiveness limited waiver opportunity?
The Biden administration used authority under the HEROES Act of 2003 to enact the PSLF waiver. This Act allows the President to modify a lot of the normal rules about student loans during periods of national emergency. Under the PSLF waiver, all federal loans, all repayment plans, and some kinds of forbearance and deferment can now qualify for loan forgiveness if you were a public servant at the time.
If you end up with more than 120 months of qualifying credit due to this PSLF waiver, you can even receive a refund.
Borrowers who have already received loan forgiveness, paid off their loans, or who have refinanced with a private company will not receive this benefit.
May 2022 Limited PSLF Waiver Update and FAQ
The guidance on the PSLF Waiver is constantly changing. Here’s the latest answers to questions you may have.
If I consolidate loans with different payment and forbearance histories, what will happen to the new consolidation loan?
The government will give you at least the amount of credit on the loan with the longest payment history. This is an extraordinarily generous decision by Department of Ed, and it allows many borrowers to consolidate strategically to get additional credit on more recent loans. In one case, a surgeon used an old loan from undergrad to get years of extra PSLF credit on his med school loans by consolidating.
Do loans need to have overlapping payment history to benefit from the PSLF waiver?
No. Prior guidance from the Department of Education stated that the loans needed to have overlapping payment histories, but they changed their mind.
Can Parent PLUS loans benefit from the PSLF waiver?
No. But if you consolidate Parent PLUS loans with at least 1 loan from your own education, then the new Direct Consolidation Loan could benefit.
Should everyone consolidate to get the PSLF waiver?
No. Some borrowers who still have years to go before they reach 10 years of public service credit might hurt themselves by consolidating. This is mainly true for borrowers with incomes higher than their debts, who might lose the ability to cap their payments at the standard 10 year plan level.
Who absolutely needs to consolidate their loans in order to benefit?
Borrowers with FFEL loans should consolidate in order to benefit from the PSLF waiver. You can call your servicer to find out if you have this type of loan, which only existed prior to 2010.
What mistake will most borrowers make that blocks them from getting benefits under the PSLF Waiver?
If you need to consolidate first, do that and then apply with all of your employment history with the PSLF help tool at studentaid.gov/pslf. If you do not need to consolidate, you still need to apply. Many borrowers have never submitted their full employment history through the Federal Student Aid website, and these borrowers risk missing out completely on the PSLF waiver benefits.
If you have additional questions, post them in the comments and we will try and grow the FAQ list above.
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How to get loan forgiveness from the PSLF Waiver
Borrowers will need to take different steps depending on what kind of loans they have and how much employment history they’ve certified with the Department of Education.
Borrowers with older loans need to take two steps and borrowers with newer Direct Loans only need to take one step.
PSLF Waiver action steps for borrowers with loans from BEFORE 2010
Borrowers with federal student loans from 2010 or before may have two kinds of loans: Direct and FFEL.
Most of these loans will be from the FFEL program (FFELP), which previously didn’t qualify for PSLF at all.
For all FFELP and Perkins Loans, you must first consolidate them into a Direct Consolidation Loan. If you have Parent PLUS loans, you can do a double consolidation to get around the rules excluding Parent PLUS from forgiveness!
Second, submit the PSLF Employment Certification Form on StudentAid.gov, also called the ECF, using the Federal Student Aid’s (FSA) PSLF Help Tool.
If you have Direct Loans from this period, certify ALL your years working at a nonprofit or government employer. You could pick up years of additional credit toward forgiveness even if you were in the wrong student loan repayment plan.
Note that you can consolidate multiple loans with different payment counts together and get credit for the new consolidation loan for the one with the most months of credit!
Note: Many FFEL borrowers could qualify for immediate forgiveness by consolidating and certifying at least 10 years of eligible employment. The vast majority of FFELs have been in repayment for at least 10 years. That means if you have 10 years’ worth of public sector employment between 2007 and 2022, you could qualify for a tax-free discharge of your loans.
PSLF Waiver action steps for borrowers with loans FROM 2010 AND AFTER
If you have federal student loans from after 2010, you most likely only have Direct Loans as the FFELP ended in 2010. Therefore, there’s no need to consolidate.
Although, given new guidance on consolidation of Direct Loans during the waiver, you might want to consider it.
Consider this scenario: you worked as a teacher after undergrad for 4 years and went back to grad school and borrowed another $100,000.
If you consolidate the grad school loans with the undergrad loans, your new loan will get credit for those four years you paid as a teacher!
The guidance on the PSLF waiver seems to change WEEKLY. It’s frustrating when we’re trying to help clients and readers maximize their benefits, but just know that there are A LOT of planning opportunities around this.
Next, Use the PSLF Help Tool and Formally Apply for PSLF
After determining if you need to consolidate or not, you only need to submit the PSLF ECF. Any previously ineligible years of payments will now count as long as you made payments of any kind on your student loans.
If you’ve already certified your PSLF credit, you can benefit automatically in the coming months as the government reviews loan accounts.
That said, I recommend you resubmit your ECF even if you’ve already done so. Include ALL employment from a 501(c)(3) or government employer between 2007 and 2021.
I expect many borrowers (even those who are PSLF-certified) neglected to include qualifying employment for years in which they didn’t make an income-based payment on their student loans.
This new PSLF order allows ANY payment to qualify, so one of the most common reasons borrowers will fail to benefit will probably be neglecting to include all qualifying public service employment on their ECF.
How long until you see the PSLF Waiver help you?
The Department of Education is in the middle of transferring 16 million borrower accounts to a new student loan servicer. FedLoan Servicing, the company that manages PSLF, is one of the servicers quitting.
If you take the actions above now, I expect you’ll have nothing to worry about.
As of May 2022, we have already seen over 100,000 borrowers get forgiveness on over $6 billion. You need to be patient and make sure you have taken all the necessary steps. Then it’s just a waiting game.
We see most consolidations happen within 1 or 2 months. Many borrowers report seeing their payment counts updated anywhere between 2 and 6 months.
Limited PSLF Waiver benefit: Technical payment problems eliminated
Another benefit of the PSLF Waiver is those with late payments and payments slightly less than the amount due will now qualify.
The PSLF program had a lot of trouble with accidental payment mistakes like paying one penny less than the required amount, which would cause a payment not to count.
Many borrowers have been fighting for years to get payment issues fixed, often of no fault of their own.
This will provide relief to many thousands of borrowers.
How many student loan borrowers will benefit?
Early reporting suggested the Biden Public Service Loan Forgiveness Waiver would benefit as many as 550,000 borrowers. However, this number only includes borrowers who have already applied for PSLF.
We’ve already seen over 100,000 borrowers get PSLF due to this waiver, and we expect that’s just the tip of the iceberg.
If you include the millions of borrowers with previously ineligible loans, millions of people could receive benefits under this PSLF Waiver.
PSLF for FFEL Loans Could Result in Completely Forgiveness for Millions of Borrowers
Take a look at the current state of FFEL loans below, none of which are eligible for PSLF under normal rules. Keep in mind, all FFEL loans have been around for at least 10 years and now could qualify for PSLF under this executive action.
| Dollars of FFELP Loans (Q2 2021) | # of Borrowers with FFELP Loans |
| $238.8 Billion | 10.6 Million |
Source: Department of Education, Q2 2021
There are presently more than 10 million borrowers with FFELP loans.
Non-profit workers represent about 10% of the workforce, according to the Bureau of Labor Statistics. And a Brookings report found that government workers represent approximately 15% of the workforce.
That means approximately 25% of the workforce would work for a qualifying employer under PSLF.
Public sector workers are more highly educated than private-sector workers as a group. That means this 25% number is likely a floor. Likely, more than 25% of the 10 million borrowers above could work for a qualifying employer.
A rough guess of the FFEL loans that could be forgiven immediately
That said, you need to be employed full-time for 10 years cumulatively to benefit as well as have made payments while employed for at least 10 years to get PSLF. Of the current public sector workers, it’s reasonable to guess at least half have met those requirements — since more than 90% of FFEL loans are in active repayment and have existed for at least 10 years since the program ended in 2010.
PSLF borrowers also tend to have higher average student loan debt balances, so an absolute floor for eligible FFEL loans might be 25% (share of the workforce in public service) * 50% (share that’s been employed in public service full time for 10 years) * $238.8 billion = $29.9 billion.
That number could easily double in size if the share of FFEL borrowers is disproportionately working in public service.
This cost estimate was not included in the Department of Education announcement.
How many Direct Loans will be forgiven from this PSLF order?
The typical public servant borrower with Direct Loans who benefits from this PSLF order will probably just get a couple of years of extra credit toward their 120 months of payments.
Many borrowers started out on the wrong repayment plan or made a loan consolidation mistake but figured out what to do shortly after that.
Borrowers who didn’t certify credit toward forgiveness during times they were on plans besides an IDR plan will have the most to gain.
Also, FAR more borrowers qualify for PSLF with Direct Loans than have currently submitted an approved employer certification PSLF form. The ultimate benefit amount of the PSLF Waiver may ultimately depend on reaching a huge number of individuals in the next year.
PSLF Waiver Results so Far
Department of Education has released forgiveness totals for each month under the PSLF waiver. Here’s what the results look like. A yellow color indicates official numbers. A green color indicates our projections if the rate of growth in approved borrowers and debt forgiven remains at 10%.
Notice that the rate of growth in approvals is slowing.
The Big Danger with the PSLF Waiver
The massive danger with the Limited PSLF Waiver is that borrowers will not hear about this life changing opportunity in time. You only have until October 31, 2022. Our consult business has tripled in part due to the massive saving opportunities with this waiver.
Please tell your friends and colleagues. My wife is a physician, and many of her highly educated physician colleagues have just discovered that they can get their entire balance forgiven by consolidating thanks to this waiver.
How many borrowers will fail to receive forgiveness simply because of how complex the government made this waiver? Far too many. Please 1) take advantage of this opportunity for you and 2) tell others about it.
If you follow the action steps in this article carefully, you could knock years off your repayment or even get complete forgiveness.
Borrowers who already had a plan in place from the beginning will likely not benefit as this order is targeted at borrowers who experienced difficulty with PSLF during the late 2000s and early 2010s when information about PSLF was less widely available (and what was available was often incorrect!).
Our team of CFA and CFP® professionals can help make sure you get the max benefits under the PSLF waiver rules. We also have to have the highest reviews of any company operating in the student loan industry, so you can trust that we take our responsibility to save you money incredibly seriously.
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