Public Service Loan Forgiveness: Temporary Waiver and an Oct. 31 Deadline

As the “Breathing Room” name implies, this blog is intended to offer you a break from life’s deadlines, stressors, and workloads, and give you a chance to take a breath, focus on yourself, and enjoy.  But, if you….

  1. Have federal student loans
  2. Are employed by any type of government or nonprofit organization
  3. Want to qualify for loan forgiveness under the Public Service Loan Forgiveness (PSLF) program, and
  4. Want to make sure you receive maximum credit for your participation,

don’t take a break quite yet.  Now is the time act before the October 31, dare we say it, deadline.

The Public Service Loan Forgiveness Program (PSLF), was created to increase the applicant pool for government and nonprofit jobs. PSLF is a federal program designed to provide an incentive to attract job seekers to employment in much needed, but often lower paying, service work. A component of the 2007 bipartisan College Cost Reduction and Access Act, PSLF promised to forgive the outstanding federal student loan debt for qualifying workers once they have made 120 monthly payments. However, the program was created without a clear, long term plan for implementation. With legislative and executive branch turnover, problems arose.

Public Service Loan Forgiveness had strict qualification requirements (which you can read about here,) and required specific action steps (which you can read about here,) to maintain that qualification.  However, once eligibility began in 2017, many individuals had their PSLF application rejected because of missed requirements, poor guidance, and misunderstandings. Many fixes were implemented over the ensuing years.

PSLF Waiver. In late 2021, the US Department of Education announced a short term PSLF Limited Waiver. As the name implies, the Waiver, which is set to expire on October 31, 2022, waives many of the original qualifying requirements. For a limited time, payments made under the wrong loan type, payments made late, and payments made prior to a new consolidation all count.  Additionally, educators who receive teacher loan forgiveness can count their qualifying time towards PSLF, and active-duty service members can count months of deferral or forbearance toward their 120 qualifying payments.

What, specifically, has changed for the Temporary Waiver until October 31? Here are a few of the major items:

Consolidated loans. Previously, consolidating student loans restarted the 120 payment count. Under the Waiver, payments made prior to the new consolidation loans now count.

Loan type. Under normal PSLF requirements, only payments for Direct Loans counted. Through the Waiver, borrowers receive credit for payments made on FFEL or Perkins loans as well. But, they MUST be consolidated into a direct loan before the October 31 deadline.

Teacher Loan Forgiveness. Teachers have their own loan forgiveness plan which provides limited dollar forgiveness after five years. Normally, outstanding loan balances would then also be eligible for PSLF after another 120 months. The Waiver allows those two time periods to run concurrently, and payments made during the teacher forgiveness window now count toward the 120 PSLF months.

Payment Plan. Payments made under graduated or extended payment plans are now accepted under the Temporary Waiver, but the loans must be consolidated into an income-driven payment plan prior to the October 31 deadline.  

Late and Partial Payments. Previously not counted toward the required 120, late and partial payments are now being retroactively added to the total needed to qualify. This should be done automatically, but borrowers should check. Similarly, certain periods of forbearance or deferment now count. This is a particular benefit to active duty military members.

This post is not a comprehensive list of changes under the Temporary Waiver. Check with your servicer, read through the government-provided information at StudentAid.Gov, complete the required forms and other actions by the October 31 deadline.

Then, breathe!

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