Loan Forgiveness for Students

The first wave of borrowers will receive $715 million in loan forgiveness for students under the new program. Under a newly expanded program announced by the Biden administration, borrowers are finally getting their student loans forgiven.

Earlier last month, the Biden administration announced an expansion of the Public Service Loan Forgiveness (PSLF) program. Borrowers who qualify for this program can wipe out federal student loan debt after 10 years of qualifying public service employment for nonprofit or public organizations.

With the new “Limited PSLF Waiver” program, announced by the Education Department on October 6, the administration will temporarily relax some of the PSLF program requirements. Taking payments on non-direct federal student loans (the “wrong” kind of loans, such as FFEL or Perkins loans), or under a non-income-driven repayment plan (the “wrong” kind of repayment plan) into account.

In the past, the PSLF program has had confusing eligibility criteria and low approval rates. Also, payments that were previously rejected on technical grounds, such as timeliness, will be counted.

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Loan Forgiveness for Students Under Expanded PSLF Program

The Limited PSLF Waiver program has started notifying thousands of borrowers that their federal student loans have been forgiven. According to a Department of Education source, approximately 10,000 borrowers have received $715 million in student loan forgiveness. There will soon be another $1.2 billion in loan forgiveness for students for another 20,000.

It had previously been announced that the Department would review borrower accounts for rejected payments, and adjust a borrower’s total number of qualifying payments accordingly for Direct loan borrowers who have already certified employment for the PSLF program.

Susan (she declined to provide her last name) received notification on November 8 that her federal student loan balance of $84,000 had been forgiven under the Limited PSLF Waiver program. In the beginning, Susan had consolidated her federal loans via the FFEL program; at the time, she was unaware that FFEL loans are ineligible for PSLF. To qualify for PSLF, she had to re-consolidate her loans through the Direct Consolidation Loan Program in 2012 – but none of the payments she had made between 2007 and 2012 would count, even though she worked for the state government during that time. I was in disbelief that none of the previous years’ payments would count, she said.

Nevertheless, under the Limited PSLF Waiver program, her pre-2012 payments on her FFEL loans will count towards the 120 “qualifying payments” required for loan forgiveness. As she had already certified her employment with the Department of Education, the Department could start applying for those payments. However, nothing happened for weeks, so Melissa filed a complaint with the Department directly. Despite making $16,000 in payments, Melissa’s loan balance grew from $70,000 in 2012 to $84,000 this week.

Melissa hadn’t thought this would ever happen. “I have three kids… and I’m starting to think about how we will pay for their college, so having this time to save for them instead of continuing to pay off my loans is a huge deal,” she said.

Similar experiences have been reported by other borrowers this week. A Reddit thread recently featured posts from borrowers who had received forgiveness under the new Limited PSLF Waiver. “$153k forgiven this morning!” said one user. “No letter or email yet, but account says paid in full/balance $0.”

A new Free Application for Federal Student Aid opens in 2022-2023

Student loans may be eligible for forgiveness in a variety of situations

Need To Take Action To Get Student Loans Forgiveness Under the PSLF

The Department has offered this relief automatically to qualified borrowers, but for many other borrowers, some form of action will be required to get their student loans forgiven under the Limited PSLF Waiver. Borrowers with FFEL-Program loans or Perkins loans will likely need to consolidate their loans through the federal Direct consolidation program, and then submit a PSLF Employment Certification. For Direct Loan borrowers who have not certified all of their past and present public service employment, they must complete PSLF Employment Certification forms by October 31, 2022.

The Department has not released full details regarding how it intends to implement the Limited PSLF Waiver program in the coming months, particularly for borrowers who need to consolidate their loans or take other steps in advance of October 31, 2022. Earlier this week, Department officials said that they are still working on rolling out the program’s benefits, and would release more information in the coming weeks and months. In the meantime, the Department’s current guidance is available here.