Changes announced to the Public Service Loan Forgiveness program

Thursday, October 28, 2021

Thousands of previously ineligible borrowers may see their debt forgiven under the Public Service Loan Forgiveness program overhaul.

The Department of Education announced big changes to its Public Service Loan Forgiveness (PSLF) Program, a federal student loan forgiveness program that was intended to cancel federal student loan debt for dedicated public service workers, including teachers, firefighters, nurses and military members. The idea was simple: Work in public service for 10 years (while making 120 on-time loan payments), and your remaining student debt will be forgiven. Unfortunately, this hasn’t been the case. Ninety-eight percent of PSLF applicants have been denied federal student loan forgiveness. Mismanagement and abuse by student loan servicers has left millions deeper in debt and disqualified borrowers with older federal loans from accessing forgiveness.

The overhaul is part of the Biden administration’s plan to address major program issues, and it will ease program requirements that previously kept hundreds of thousands of borrowers from qualifying for the PSLF loan discharge. Here’s what you should know:

• All prior payments made by student borrowers toward PSLF, regardless of loan or repayment type, will count. For a limited time, federal borrowers can get credit for any repayment made while working for an eligible employer, even if you were enrolled in the wrong repayment plan, had the wrong type of federal loan or made a late payment. To make sure past payments are counted towards your 120-payment requirement, submit a PSLF form by Oct. 31, 2022.
• Military active duty months now count toward repayment. Military members can have the months they spend on active duty count as PSLF payments, even if their student loans are in deferment or forbearance. Previously, months where student loans were not actively being repaid would not count toward PSLF.
• Previously denied PSLF applications will be reconsidered. The Department will review all previously denied PSLF applications. Borrowers will also be able to submit an appeal next year if their application is still denied under this new process.

The Consumer Financial Protection Bureau, Office of Federal Student Aid and The Institute of Student Loan Advisors will host a webinar that will layout the steps to qualify and apply for Public Service Loan Forgiveness (PSLF). The webinar is designed to help you understand the requirements and give you practical tips to help you get on track to achieve loan forgiveness. Click here to register for the November 4th webinar.

For more information on the changes to the Public Service Loan Forgiveness Program, visit the Department of Education’s FAQ webpage.