On October 6, 2021, the U.S. Department of Education announced a change to the Public Service Loan Forgiveness (PSLF) program rules for a limited time as a result of the COVID-19 national emergency.
For a period of time, certain borrowers may receive credit for past payments made on loans that would otherwise not qualify for PSLF.
Ok, so what changed?
Directly from Federal Student Aid.gov:
"Under the new rules, any prior payment made will count as a qualifying payment, regardless of loan type, repayment plan, or whether the payment was made in full or on time. All you need is qualifying employment. This change will apply to student loan borrowers with Direct Loans, those who have already consolidated into the Direct Loan Program, and those who consolidate into the Direct Loan Program by Oct. 31, 2022."
- Repay under an IDR** plan
- Make 120 qualifying payments
- Past payments under any plan count
- Past ineligible loan payments may count toward 120 total payments
If you have Federal Family Education Loan (FFEL) Program loans, Federal Perkins Loans, or other types of federal student loans that are not Direct Loans, you must consolidate those loans into the Direct Loan program by October 31, 2022.
Parent PLUS loans are *not* eligible under the limited PSLF waiver.
What has NOT changed?
You still need to be (or have been):
- Employed by government, 501(c)(3) not-for-profit, or other not-for-profit organization that provides a qualifying service
You must have worked full-time for a qualifying employer when prior payments were made. If you were employed in more than one qualifying part-time job at the same time, you will be considered full-time if you worked a combined average of at least 30 hours per week. You can receive credit only for payments made after October 1, 2007, since that's when the PSLF Program began.
- Work full-time
- Have Direct Loans or consolidate into Direct Consolidation Loan
What does this mean for you?
- If you've refinanced all of your federal student loans into private loans, you don't need to do anything. Private loans aren't eligible. (Be sure to pay off those private loans ASAP!)
- If you have federal student loans and are not pursuing PSLF, you don't need to do anything.
- If you have already received forgiveness on your federal student loans (and you don't have any other federal loans), you don't need to do anything.
- If your federal student loans already qualify for PSLF, you've been following the correct process to get credit for each of your payments, and you don't have any past payments that didn't qualify, you probably don't need to do anything.
- If you have (or think you have) Federal Family Education Loan (FFEL) Program loans, Federal Perkins Loans, other types of federal student loans that are not Direct Loans, and wish to pursue PSLF, this limited waiver opportunity may make a lot of sense for you. Here are some more information and next steps.
Where can I get more information?
Federal Student Aid has an extensive summary here: Public Service Loan Forgiveness Limited Waiver Opportunity and here is the U.S. Department of Education's official announcement as well.
The New York Times has a good summary here.
**IDR = Income-driven repayment (IDR) refers to repayment plans for federal student loans where your required payment is linked to your (and sometimes your household's) income. These plans include:
- Revised Pay As You Earn (REPAYE)
- Pay As You Earn (PAYE)
- ncome-Based Repayment (IBR)
- Income-Contingent Repayment (ICR)