You Can Finally Claim Student Loan Forgiveness
For years, the Public Service Loan Forgiveness (PSLF) program has struggled to actually forgive student loan debt. But yesterday the Biden administration announced changes that would immediately clear student loan debt for about 22,000 borrowers and help hundreds of thousands more secure loan forgiveness sooner than expected. Here’s how the changes can affect your student loans.
Lightweight PSLF Program Requirements
In 2007, Congress created the federal student loan forgiveness program to encourage people to work in federal and local governments, public schools, and the military. In exchange for 10 years of full-time work (or 120 student loan payments), the program writes off the federal loan balance – or at least that’s how it should work. However, this rarely happens, according to a 2019 report by the Government Accountability Office (GAO) , as only 1% of applicants were found to be eligible for student loan forgiveness.
Part of the problem is that the program was only available to borrowers with direct loans, a special type of student loan administered by the federal government. One option was to consolidate existing student loans into a direct loan, but this pushed borrowers even further as previous payments on other loans did not count towards the 120 payments required to write off the outstanding balance.
To this end, the Department of Education is now offering a limited waiver that “allows all payments by student borrowers to PSLF to be counted, regardless of the loan program or payment plan.” All borrowers who currently have FFEL, Perkins or other indirect loans can benefit from this limited waiver if they apply for consolidation in the direct loan program and submit the PSLF form by October 31, 2022. In addition, members of the Military will be able to count on reprieve and patience during active duty in regards to the forgiveness loan. The Department of Education estimates that this will help 550,000 student loan borrowers achieve loan forgiveness sooner than expected.
How to apply for a PSLF waiver
The Department of Education says it will contact borrowers to encourage them to pool their loans or apply for the program by October 31, 2022. To apply for a waiver, start by visiting StudentAid.gov/PSLFWaiver .