The Education Department is in the process of processing hundreds of thousands of student loan forgiveness applications for borrowers who have committed to careers serving their community or the public. And many more borrowers may qualify for relief in the coming months.
The Public Service Loan Forgiveness (PSLF) program can eliminate the federal student loan debt for borrowers who work for 10 years or longer for qualifying nonprofit or government organizations. The program requires 120 “qualifying payments” to reach the threshold for loan forgiveness. But navigating PSLF has been challenging for many borrowers, due to complicated eligibility rules, poor administration by loan servicers and insufficient oversight by the Education Department.
The Biden administration is implementing two temporary initiatives designed to relax PSLF rules and expand the pool of borrowers who can qualify for student loan forgiveness. The Limited PSLF Waiver program has allowed many past periods of repayment to count towards PSLF; the waiver technically ended last fall, although the Education Department continues to process applications. Meanwhile, the IDR Account Adjustment has extended and expanded many of the benefits of the Limited PSLF Waiver, giving more borrowers a shot at receiving relief.
In addition, new regulations are set to go into effect this summer. These new rules will fundamentally change certain aspects of the PSLF program once the Biden administration’s temporary PSLF initiatives come to an end.
Here’s the latest.
Nearly Half a Million Borrowers Approved For Student Loan Forgiveness Under PSLF Waiver
According to the Education Department statistics, over 450,000 borrowers have been approved for student loan forgiveness under the PSLF waiver through early February 2023. The department continues to process PSLF applications and has not yet worked its way through the many applications that were submitted last fall before the waiver ended on October 31. Hundreds of thousands of additional borrowers may be approved for loan forgiveness under PSLF in the coming weeks and months.
MOHELA call lines improving for student loan forgiveness questions
MOHELA, an Education Department loan servicer, took over administering the PSLF program from FedLoan Servicing last year. MOHELA had a rough roll out, with reports of impossibly long call hold times and widespread delays in processing.
While it is still taking many months for borrowers to have their PSLF forms processed, anecdotal reports in the last month or so suggest that MOHELA has dramatically improved its customer service call center. Borrowers should now have an easier time reaching a MOHELA customer service agent if they have questions or need to discuss their account.
New digital signature feature for PSLF forms
The Education Department has quietly rolled out a new feature for borrowers who need to complete PSLF Employment Certification forms. The department now allows an employer to electronically sign the form via an email invitation from the department’s digital signature service. All the borrower needs to do is input the employer contact’s email address; the contact would then receive an invitation to sign the PSLF form digitally.
The department and its contracted loan servicers have historically been strict about signature requirements for PSLF forms, which aren’t always well-communicated to borrowers. For example, all signatures (including digital signatures) must be hand-drawn; typed signatures and signatures captured via digital signature services would likely be rejected. Those requirements have not changed. However, the new electronic signature feature gives borrowers a new option that may make it easier for employers to sign, and will hopefully cut down on rejections.
Borrowers must use the PSLF Help Tool (which the Education Department recommends, anyway) to access the new signature option.
Lag between 120 payments and approval for student loan forgiveness
When a borrower has made 120 “qualifying” PSLF payments, they are entitled to receive student loan forgiveness. But loan forgiveness is not always instant. MOHELA may notify borrowers that they have reached the 120-payment threshold before the Education Department has approved and processed loan forgiveness.
Borrowers should be aware of this potential lag. Anecdotal reports indicate that borrowers are being advised that it may take up to 90 days after approval of the 120th qualifying payment for a borrower’s loans to be forgiven and the balance discharged. It could even take longer, depending on the Education Department’s backlog.
Borrowers who believe they have made the 120 qualifying payments required to receive student loan forgiveness under PSLF have the option of requesting an administrative forbearance while their PSLF form is processed, to postpone payments until they have received loan forgiveness.
IDR Account Adjustment extended to end of 2023
The Limited PSLF Waiver ended last fall, but the IDR Account Adjustment is still ongoing. Under this one-time adjustment, the Education Department will be able to retroactively credit borrowers with qualifying PSLF payments that otherwise may not have counted, such as payments made on non-qualifying federal student loans or under non-qualifying repayment plans, as well as certain past periods of deferment and forbearance. Borrowers who have non-Direct federal student loans (such as FFEL loans) would need to consolidate those loans via the federal Direct consolidation loan program to benefit.
The Education Department recently quietly extended the availability of the IDR Account Adjustment and associated deadlines. Borrowers who need to consolidate and submit PSLF employment certification forms now have until the end of 2023 to benefit from the one-time initiative. Implementation is expected to continue through 2024. Borrowers should read current guidance on the IDR Account Adjustment, and further details are expected to be released soon.
New PSLF regulations go into effect this July
While the Limited PSLF Waiver and the IDR Account Adjustment are temporary, one-time initiatives, new regulations governing the PSLF program will go into effect this July. Those new rules will provide more lasting changes to the program. Some key reforms will include the following:
- Borrowers will be able to receive credit toward PSLF on payments that are made late, in installments, or in a lump sum.
- Certain (but not all) deferment and forbearance periods will be able to count toward PSLF.
- Borrowers will receive a weighted average of existing qualifying PSLF payments toward PSLF when they consolidate their Direct Loans. Historically, consolidation erased all progress (although that rule was suspended for the Limited PSLF Waiver).
- Requirements governing qualifying employment will be clarified and expanded. The Education Department will adopt a single standard of full-time employment at 30 hours per week (instead of the previous requirement that an employer specifically consider a borrower to be “full-time”) and will expand access for certain adjunct faculty members, as well as some contractors who are providing a service for nonprofit organizations but are prohibited from being the nonprofit’s employee under state law.