How the End of the PSLF Temporary Waiver Will Affect BorrowersSeptember 12, 2022
While President Biden’s announcement on partial student loan forgiveness got a lot of attention, another major student loan benefit has been mostly overlooked: Temporary Expanded Public Service Loan Forgiveness (TEPSLF), also known as the Public Service Loan Forgiveness waiver.
Public Service Loan Forgiveness (PSLF) provides loan forgiveness to borrowers with federal student loans that work in public service. However, PSLF approval rates are remarkably low. As of June 2022 — the last available data — just 3.6% of applicants met the criteria for PSLF.
TEPSLF expanded eligibility for loan forgiveness, but borrowers have to take action by October 31, 2022, to take advantage of it.
What Is PSLF?
Under PSLF, eligible federal loan borrowers can qualify for loan forgiveness if they work full-time for a non-profit organization or government agency for at least ten years.
To qualify, borrowers must meet the following requirements:
- They must have eligible loans: Under the original PSLF program, only borrowers with federal Direct student loans qualify for forgiveness.
- They must make 120 qualifying monthly payments: The borrower must make 120 monthly payments under a qualifying payment plan. For PSLF, eligible payment plans include:
- Income-Based Repayment (IBR)
- Income-Contingent Repayment (ICR)
- Pay As You Earn (PAYE)
- Revised Pay As You Earn (REPAYE)
- They must certify employment: Borrowers have to submit certification for each year of eligible employment. It’s recommended that you certify your employment annually to ensure your employment counts toward PSLF.
- They must submit an application: Loan forgiveness through PSLF isn’t automatic. Once you’ve made 120 monthly payments and completed ten years of full-time employment for a qualifying employer, you must fill out and submit a PSLF application.
What Is the Temp PSLF Waiver?
The number of PSLF applicants approved for loan forgiveness is extremely low. Many borrowers pursued PSLF without realizing their loans or payment plans didn’t qualify. Under traditional PSLF, borrowers with Federal Family Education Loans (FFEL) and Perkins Loans don’t qualify. And payments made under alternative payment plans don’t count toward the 120 payments.
Those issues were confusing for many borrowers. As a result, the U.S. Department of Education launched the TEPSLF waiver that temporarily expanded access to PSLF.
TEPSLF program makes the following short-term changes:
- Borrowers will receive credit for payments made under any repayment plan
- Borrowers with FFEL or Perkins loans are also eligible for loan forgiveness if they consolidate their loans
- Periods of repayment before loans were consolidated with a Direct Consolidation Loan count toward forgiveness
- Periods of repayment where payments were late or less than the amount due also count
- Borrowers can get forgiveness even if a qualifying employer doesn’t currently employ them at the time of application.
- Borrowers that received Teacher Loan Forgiveness can count their periods of service toward PSLF too.
How to Apply for the Public Service Loan Forgiveness Waiver
TEPSLF is a limited-time opportunity for federal loan borrowers. The changes aren’t automatic; you must take action to benefit from the temp PSLF waiver.
To apply for the TEPSLF program, follow these steps:
- Check your employer’s eligibility: You can use the employer search tool to find out if your employer is a qualifying employer for PSLF.
- Consolidate your loans: If you have FFEL loans, Perkins loans, or make payments under a non-qualifying payment plan in the past, you must consolidate your loans with a Direct Consolidation Loan by October 31, 2022.
- Use the PSLF Help Tool: After consolidating your debt, you can use the PSLF Help Tool to generate employment certification forms or apply for PSLF. It will include instructions on how to submit your information to Mohela, the new federal loan servicer in charge of PSLF.
The TEPSLF opportunity ends on October 31, 2022. If you miss that deadline, your loans or payments won’t meet the criteria for PSLF.
As the date nears, StudentAid.gov will likely experience heavy traffic, and the site may be unable to handle the number of users. To avoid missing the deadline because of system outages, consolidate your loans as soon as you can.
What to Do If You Aren’t Eligible for PSLF
While the TEPSLF waiver expands PSLF for some borrowers, it’s a temporary opportunity, and many borrowers are still ineligible for loan forgiveness. If you don’t work for a qualifying employer or have private student loans, you can’t take advantage of PSLF — even with the expanded requirements.
If that’s the case, another way to effectively manage your debt is through student loan refinancing. Borrowers with good credit — or that have a cosigner willing to help — can potentially refinance their loans and get a lower interest rate. Over time, refinancing can help borrowers save money and become debt-free sooner.
Refinancing has some drawbacks for federal loan borrowers. You’ll no longer be eligible for federal loan benefits like PSLF or income-driven repayment plans, so be sure you won’t use those programs before refinancing your debt.
You can use the student loan refinance calculator to see how refinancing may affect your monthly payments and total repayment cost and to help you decide if refinancing is right for you.