Hundreds of thousands of borrowers have received student loan forgiveness under initiatives designed to improve Public Service Loan Forgiveness, according to the Biden administration.
Public Service Loan Forgiveness, or PSLF, is a key federal student loan forgiveness program that can eliminate a borrower’s federal student loan debt after 120 “qualifying payments” — the equivalent of 10 years. But the PSLF program has long been plagued by poor administration and inadequate oversight resulting in mistakes, rejections, and dismally low approval rates that never exceeded the low single digits.
But after the Biden administration initiated a series of improvements, student loan forgiveness approvals under PSLF have skyrocketed. “The Biden-Harris Administration has already approved… $45.7 billion for 662,000 public servants through improvements to Public Service Loan Forgiveness (PSLF),” said the Education Department in a statement on Tuesday. And more loan forgiveness is coming as these initiatives continue.
Here’s what’s happening.
Student Loan Forgiveness Under PSLF Waiver
The Biden administration launched the first PSLF improvement, called the Limited PSLF Waiver, in 2021. That one-time initiative relaxed the rules governing qualifying PSLF payments, broadening the definition of what could count toward loan forgiveness under the program.
Previously, only payments made on Direct federal student loans under a 10-year Standard or income-driven repayment (IDR) plan could count toward loan forgiveness. But the Limited PSLF Waiver allowed almost any period of repayment on any federal student loan to count as far back as October 2007, when PSLF was first created.
The Limited PSLF Waiver officially ended last October. However, the Education Department and MOHELA, its contracted PSLF servicer, are still processing a backlog of PSLF applications related to the waiver.
Student Loan Forgiveness For Public Servants Under IDR Account Adjustment
Many of the benefits of the Limited PSLF Waiver were subsequently extended by the IDR Account Adjustment, which is ongoing. While much of the attention on the IDR Account Adjustment has focused on student loan forgiveness for borrowers on 20- or 25-year repayment tracks, the IDR Account Adjustment can also benefit PSLF borrowers.
The IDR Account Adjustment broadens even further what can count toward student loan forgiveness. In addition to most periods of repayment, the adjustment can also credit some periods of deferment, forbearance, and even recent default toward PSLF for borrowers who were working in qualifying employment. Borrowers are receiving PSLF credit and associated loan forgiveness approvals on a rolling basis as the Education Department implements the adjustment through early 2024.
Some borrowers may need to consolidate their loans via the federal Direct consolidation program to qualify or maximize the PSLF benefits under the IDR Account Adjustment. But there’s still time to do so, as the window for consolidating to benefit from the adjustment ends on December 31, 2023.
New PSLF Rules May Expand Student Loan Forgiveness
The Limited PSLF Waiver and IDR Account Adjustment are temporary programs. But on July 1, the Education Department implemented new PSLF regulations designed to provide more lasting benefits to borrowers seeking loan forgiveness under the program.
The new rules partially codify some of the benefits of the temporary waiver and adjustment initiatives, allowing certain periods of deferment and forbearance to count toward loan forgiveness under PSLF. The reforms also will allow borrowers to retain at least some PSLF credit after consolidation (previously, consolidation would erase a borrower’s PSLF credit). Borrowers will also have the ability to “buy back” past periods that may not have counted toward loan forgiveness.
The new regulations also simplify and expand the definition of qualifying PSLF employment, particularly for non-full-time employees, certain contracted employees in limited circumstances, and adjunct faculty. And the regulations relax the definition of a qualifying payment, allowing borrowers to prepay or make a lump sum payment in certain circumstances.
Further Student Loan Forgiveness Reading
Education Department Suggests More Student Loan Forgiveness Approvals This Month
Timeline For Biden’s New Student Loan Forgiveness Plan Gets Clearer
Biden Administration Announces $72 Million In Student Loan Forgiveness
Student Loan Forgiveness Update: What The Latest Court Victory Means For Borrowers
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