How To Take Advantage Of The Student Loan Forgiveness Changes

For nonprofit and government workers, the Public Service Loan Forgiveness (PSLF) program sounded like a dream come true. The promise was simple: After working full time in their jobs for at least 10 years and making payments toward their debt, the federal government would forgive their student loans.

In reality, it turned out to be much more complicated than that. According to the last available data, roughly 5% of the submitted PSLF forms—approximately 3,600 out of over 171,000—qualified for loan forgiveness through the program as of April 30.

To address the program’s problems, the U.S. Department of Education announced changes to the PSLF rules. The changes, announced October 6, will only last for a limited time, but it may expand student loan forgiveness to more borrowers.

Overview of PSLF Updates

The U.S. Department of Education made changes to the PSLF program as part of its efforts to help borrowers struggling with student debt. The move temporarily expands what loans are eligible for PSLF and removes some of the payment requirements for loan forgiveness, making it easier to qualify for the program.

What Counts As a Qualifying Payment for PSLF?

The most significant change to the PSLF program concerns qualifying payments. Previously, you had to enroll in a qualifying payment plan to participate in PSLF. Prior to the changes, only payments made under an income-driven repayment (IDR) plan could count toward PSLF. But with the new changes, any payments you made—regardless of what your repayment plan was—will count toward the necessary number of payments.

For example, if you made payments under a standard repayment plan before enrolling in an eligible IDR plan, those payments can now be included toward the 120 monthly payment requirement.

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The changes are retroactive. If you previously made payments toward your student loans that weren’t counted toward PSLF, you can apply to have them counted now.

What Loans Are Eligible for PSLF?

Before the U.S. Department of Education announced changes to the program, only federal direct loan borrowers were eligible for PSLF. Borrowers with other types of federal student loans, such as Perkins loans or Federal Family Education loans (FFELs), did not qualify.

However, that’s now changed. If you have FFEL or Perkins loans, you can qualify for PSLF—and get credit for payments you’ve made in the past—as long as you consolidate your debt with a direct consolidation loan by October 31, 2022.

What Stays the Same

The majority of the PSLF program’s requirements are untouched. Borrowers still have to meet the following criteria:

  • Loan Type: Borrowers must have federal student loans. Private student loans are not eligible for PSLF.
  • Employment: Applicants must work for a qualifying nonprofit organization or government agency on a full-time basis for at least 10 years.
  • Payments: The borrower must make 120 monthly payments to qualify for forgiveness.

How Do I Take Advantage of These New Rules?

While the changes go into effect immediately, they aren’t all applied automatically. You may have to complete some steps to get credit for past payments or to pursue PSLF with FFEL or Perkins loans.

If You Have Direct Loans

If you have federal direct loans and haven’t yet submitted a PSLF form or employment certification form, make sure you fill out and submit the PSLF form by October 31, 2022. If you don’t send in your form by that date, you can’t get credit for past payments. You can submit the PSLF form online with the PSLF Help Tool.

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If You Have FFEL or Perkins Loans

For FFEL or Perkins loan borrowers, you must consolidate your loans with a direct consolidation loan by October 31, 2022. If you don’t consolidate by that date, you won’t receive credit for payments that you made. Once you consolidate your loans, submit a PSLF form to your loan servicer.

Note: If you have FFEL or Perkins Loans, the PSLF Help Tool may tell you that your loans are ineligible, but that’s only because the tool hasn’t been updated yet to reflect these changes. According to the Office of Federal Student Aid, it could be several months before the tool is updated. You can still certify your employment eligibility or request consolidation, but you can’t use the tool to submit a PSLF application yet.

If You Have PLUS Loans

PLUS Loans include Grad PLUS loans and Parent PLUS loans. PLUS Loans are issued under the federal Direct loan program and are eligible for PSLF, but there are some important distinctions.

  • Grad PLUS: Grad PLUS loans are eligible for all of the IDR plans and don’t have to be consolidated first to qualify. To pursue PSLF, borrowers should submit a PSLF form and use the PSLF Help Tool to ensure their payments and employment qualify for the program.
  • Parent PLUS: The changes announced by the U.S. Department of Education don’t apply to Parent PLUS Loans. The only way parent loan borrowers can qualify for PSLF is if they consolidate their debt with a Direct Consolidation Loan and enroll in an income-contingent repayment plan—the only IDR plan parents are eligible for under the current rules.

What If I Don’t Know What Kind of Loans I Have?

It’s not uncommon to be unsure about what types of student loans you have. Many college graduates leave school with eight to 12 different loans, so it’s easy to get confused. You can find out what loans you have with one of the following approaches:

  • Log in to the Federal Student Aid site. You can use your Federal Student Aid (FSA) ID to log onto the Federal Student Aid site. It will tell you what loans you have and what loan servicer is handling them.
  • Call the Federal Student Aid Information Center. Call 800-433-3243 to speak to a representative.
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What If I Still Have Questions?

If you have questions about PSLF and whether or not you’re eligible for the program, you can use the following resources:

  • Contact Your Loan Servicer. Your loan servicer is your main contact for questions about your loans, repayment plans and forgiveness application. Call or email your loan servicer’s customer service department for help.
  • Use the PSLF Help Tool. Use the PSLF Help Tool to find out if your employment and loans are eligible for forgiveness. Based on your answers, the tool will also generate the necessary forms you need to complete to certify your employment and apply for PSLF.
  • Visit the Office of Federal Student Aid site. You can check the Federal Student Aid’s website for updates about the PSLF program and get answers to frequently asked questions.

Note: FedLoan Servicing is the designated PSLF loan servicer. However, the company announced in September that it will no longer service federal student loans once its current contract ends. Borrowers that are currently with FedLoan Servicing and borrowers that intend to pursue PSLF will be transferred to another loan servicer over the coming months. To ensure you don’t miss any notifications, make sure your loan servicer has your most up-to-date contact information.

Pursuing Loan Forgiveness

While the PSLF program can be confusing, the latest changes will make loan forgiveness accessible to more borrowers. If you work for a nonprofit organization or government office and have federal student loans, you may be more likely to qualify for PSLF—and get loan forgiveness months or even years sooner than you expected.