PSLF Limited Waiver: Steps to Take

by Michelle Clifton, former financial aid officer at Babson College Do Not Miss Additional Progress Toward Loan Forgiveness Last month the Department of Education announced temporary changes to the requirements of Public Service Loan Forgiveness (PSLF). Borrowers working full-time in public service can now receive credit for payments that have been or would have been deemed ineligible for this forgiveness program—payments made under the wrong repayment plan and/or for ineligible federal loans. This is excellent news, but is only for a limited time and there are steps that you may need to take to get your past payments counted. Steps to Take Prior to 10/31/2022 Who needs to consolidate? Payments made to ineligible federal loans, such as Stafford or Graduate PLUS loans under the FFEL program or Perkins loans, must be consolidated into the Direct loan program in order to have prior payments counted as eligible payments. Note: Parent PLUS loans are not eligible for the limited waiver. The deadline to consolidate is October 31, 2022. If this applies to you, head over to the Federal Student Aid website. Login with your FSA ID and complete the Federal Loan Consolidation application. Through the consolidation process, your FFEL and/or Perkins loans will be paid in full and you will have a new Federal Direct Consolidation loan with a fixed interest rate—a weighted average of all loans included rounded up to the nearest one-eighth of one percent. If you are including any Direct loans in your consolidation, you will not lose progress toward PSLF as you normally would in the past due to the waiver (i.e. the payment clock will not restart). Give the consolidation application a few weeks to process. Once complete, it will then be time for you to download and complete the PSLF Certification & Application form and return it to your loan servicer. Be sure to have your current and any other eligible employer after October 1, 2007 complete this form. Do not forget this step because consolidation alone will not prompt the recount of your payments. Have this same form completed by your employer on an annual basis, or more frequently if you change employers. Who else needs to submit the PSLF form to confirm employment? The PSLF form should be submitted by any borrower working full-time in public service who did not previously submit the PSLF Certification & Application form to their servicer to cover each period of employment. This will allow the Department of Education to count all payments, regardless of repayment plan—including the ineligible plans for PSLF such as Graduated, Extended, or the Standard Plan for a Consolidation loans. They will also count payments that were slightly short on the amount due and/or a few days late from the payment deadline. Borrowers who have been in repayment for ten years or longer should also submit the PSLF form for all periods of employment in order to apply for loan forgiveness. When will payment counts update? Please be patient as it will likely take several months for the review of all student loan accounts and for the payment count to be updated. The Department of Education is working hard to improve outreach and communication for PSLF, so look out for emails and respond immediately to any documentation requests. Also, keep an eye out for PSLF improvements in the near future.