Student Loan Forgiveness: This New Waiver Makes It Simpler Than Ever To Shed Your Loan

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Department of Education Secretary Miguel Cardona is urging Americans to apply to the Public Service Loan Forgiveness program (PSLF) to see if they’re eligible. At the same time, the Biden administration is seeking public comment on a new set of proposals.

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“The PSLF Waiver has simplified the process of getting loan forgiveness. But you have to be signed up by October. I encourage everyone – even if you have been denied before or used other benefits – to apply,” Cardona tweeted last week.

On Oct. 6, 2021, the Department of Education announced a temporary period during which borrowers may receive credit for payments that previously did not qualify for PSLF, a program aimed at forgiving the federal student loans of public service workers. Now, for a limited time, borrowers may receive credit for past periods of repayment that would otherwise not qualify for PSLF, according to the Department. The waiver will expire on Oct. 31, 2022.

On July 6, the Department released proposed regulations that would expand and improve the major student loan discharge programs authorized by the Higher Education Act, including those for public service workers who have met their commitments under the PSLF program, according to a press release.

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The Department said in the release that the public is invited to comment on the proposed regulations for 30 days, and that it aims to finalize these rules by November 1 of this year, meaning they will take effect no later than July 1, 2023.

As part of the proposals, the Department would allow more payments to qualify for PSLF including partial, lump sum and late payments, as well as allowing certain kinds of deferments and forbearances (such as those for Peace Corps and AmeriCorps service, National Guard duty, and military service) to count toward PSLF.

It also intends to make rules work better for non-tenured instructors whose colleges need to calculate their full-time employment. The Dept. is also seeking comment on how to consider the eligibility for PSLF of doctors providing services at nonprofit hospitals in states that prohibit their direct employment by that hospital, and employees of for-profit early education programs that are licensed and regulated, according to the release.  

“Borrowers should not have to jump through hoops to get the relief they deserve,” Under Secretary of Education James Kvaal said in the release. “The regulations we’ve proposed today would remove many of those barriers and help create a federal student loan system that works better for borrowers.”

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These proposed regulatory changes would build on parts of the limited PSLF waiver that the Department announced in October 2021.

The Student Borrower Protection Center (SBPC) estimated in June that 9 million public service workers with federal student loans are eligible to pursue debt cancellation through the PSLF program, but fewer than 150,000 have had debts canceled under the recently overhauled federal program, according to a press release.

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To be eligible for the PSLF, the requirements are:

  • Making 120 qualifying payments or the equivalent
  • Being employed by the government, 501(c)(3) not-for-profit, or other not-for-profit organization that provides a qualifying service
  • Working full time
  • Having Direct Loans or consolidating into Direct Consolidation Loans
  • Certifying qualifying employment for the periods you seek credit toward PSLF

Under the current waiver, borrowers can receive credit for past periods of repayment on loans that would otherwise not qualify for PSLF. In addition, for Federal Family Education (FFEL) Program loans, Perkins, or other federal student loans, you’ll need to consolidate your loans into a Direct Consolidation Loan to qualify for PSLF, both in general and under the waiver, according to the Department of Education.

Last week, a bill was introduced in the U.S. House of Representatives “to make it easier for Americans pursuing careers in public service — including teachers, police officers, firefighters, military service members, and more — to receive the student loan forgiveness they were promised by Congress in 2007 under the Public Service Loan Forgiveness (PSLF) program.”

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The Simplifying and Strengthening PSLF Act would make permanent the recent improvements to the PSLF program under the Biden Administration, according to a press release.

“The Public Service Loan Forgiveness (PSLF) program was designed as an incentive for talented graduates to enter public service careers where they are desperately needed. Unfortunately, historically, 98% of applicants were denied loan forgiveness due to bureaucratic red tape,” said Congresswoman Alma Adams, founder and co-chair of the Congressional Bipartisan HBCU Caucus.

“Our bill, the Simplifying and Strengthening PSLF Act, ensures we keep the promise to our public servants by codifying administrative fixes made by the Biden Administration. At a time when so many students and borrowers are awaiting debt relief, we must honor our promises.”

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.
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