Public Service Loan Forgiveness: Monday is last day to apply for limited waiver

WASHINGTON - Teachers, first responders, government workers, and others in public service roles have until Monday to file applications for a special waiver related to student loan forgiveness. 

Last year, temporary changes were made to U.S. Public Service Loan Forgiveness (PSLF), a troubled student loan forgiveness program designed for borrowers working in public service jobs — but long criticized for its complex requirements. 

The PSLF program was first created in 2007 as a reward for college graduates who pursue jobs that often pay modest salaries but serve a greater good, such as careers in teaching, government organizations including the military, or nonprofit groups. Qualifying for the program is based on the employer, rather than the specific job.

It allows these employees to have their debt canceled after 10 years of qualifying monthly payments on federal student loans. But its complex requirements meant only 5,500 borrowers had gotten their loans erased as of 2021, according to the Department of Education. More than 90% of applicants were found to have been rejected. 

After making a decade of payments, many borrowers learned they had the wrong type of federal loan or repayment plan to be eligible for the program. Thousands have ended up stuck with debt they thought would be cleared.

The new, limited waiver allows borrowers to receive credit for past periods of repayment that would otherwise not qualify.

Public Student Loan Forgiveness deadline

Under the temporary changes, borrowers who have worked 10 years in a qualifying job are eligible for loan relief no matter what kind of federal loan or repayment plan they have through the end of the day on Oct. 31, 2022. 

Past loan payments that were previously ineligible now count, moving some borrowers closer to the finish line.

Click here to see if you qualify for the limited PSLF waiver, and for those who still need to submit their PSLF application, they can do so here. 

One-time student loan debt relief

The PSLF program is different from the recently-announced, one-time student loan debt relief of up to $20,000 under the Biden administration. In August, President Joe Biden announced that many Americans can have up to $10,000 in federal student loan debt forgiven and that those who qualified for Pell grants are eligible for $20,000 to be forgiven. 

The application is now fully available at studentaid.gov after a beta version opened earlier this month.

Changes to income-driven repayment plans

Earlier this year, the Department of Education also made changes to its income-driven repayment program (IDR), which was expected to bring immediate debt cancellation for at least 40,000 borrowers and help millions of others lower their debt.

There are more than 9 million borrowers enrolled in IDR plans, a program created in 1994 that was meant to provide a safety net for people who struggle to repay student loans. The program now offers five repayment options that provide reduced monthly payments based on income and family size. The borrower’s remaining balance is supposed to be automatically forgiven after 20 or 25 years, depending on the plan.

Out of the more than $1 trillion in student debt held by the federal government, about half is being repaid through those plans.

But a study of the program released earlier this year identified 7,700 federal student loans that appeared to meet the conditions for loan forgiveness but had yet to be canceled as of September 2020. Only 157 loans had been forgiven through income-driven plans, according to the study.

In a response to the report, Education Department officials acknowledged the failures of the program and said in April that it would begin work on implementing the new changes "immediately," but that borrowers would not see the effect in their accounts until the fall of 2022.

"Beyond the changes that will provide relief retroactively to borrowers, [the Department of Education] will take action to ensure that borrowers continue to receive these benefits in the future," it said.

This story was reported from Cincinnati.