The Biden administration has approved billions of dollars in student loan forgiveness under the Limited PSLF Waiver, a temporary initiative that expanded eligibility through the Public Service Loan Forgiveness program, according to new Education Department data.
Hundreds of thousands of borrowers have directly benefited from this relief. And unlike Biden’s one-time student debt cancellation initiative, which remains blocked by federal courts, implementation is ongoing.
Here’s the latest.
Student Loan Forgiveness Under PSLF Waiver Continues, Even As First Phase Ends
The Public Service Loan Forgiveness (PSLF) program can wipe out the federal student loan debt for borrowers who work in public service careers as employees of certain nonprofit or government organizations. After 10 years of qualifying employment, the borrower can receive tax-free student loan forgiveness under federal law.
The PSLF program has been riddled with problems for years, however. The program had complicated eligibility requirements, with strict rules about what constituted a “qualifying payment” that could be counted towards the 120 payments required to receive loan forgiveness. One mistake by a borrower — such as making a payment under the wrong plan, or consistently paying too late or too early — could jeopardize eligibility. The rules were also often poorly communicated to borrowers by loan servicers, or not communicated at all. The result was a dismal approval rate.
The Limited PSLF Waiver, which the Biden administration announced last year, was designed to address these problems. Under the waiver, the Education Department can retroactively credit many past loan repayment periods as “qualifying payments” towards PSLF regardless of the type of federal student loan or the repayment plan, or whether a payment was made in full or on time. A related initiative called the IDR Account Adjustment allows certain past periods of deferment and forbearance to count towards PSLF, as well.
Although the Limited PSLF Waiver ended on October 31, the Education Department and MOHELA (its contracted PSLF loan servicer) are still processing a backlog of submitted applications. According to new data released last week by the department, the administration has so far approved $24 billion in student loan forgiveness for 360,000 borrowers through October under the waiver. And more is coming, as the data does not include the many PSLF forms the department received closer to the October 31st deadline, according to a department official.
Even More Student Loan Forgiveness is Coming Over The Next Few Months
While the Limited PSLF Waiver officially ended last month, many of the program flexibilities and benefits are effectively being extended by its companion program, the IDR Account Adjustment.
Just like for the Limited PSLF Waiver, the IDR Account Adjustment will allow the Education Department to retroactively credit many past periods of repayment, deferment, and forbearance towards student loan forgiveness under 20-year and 25-year Income Driven Repayment (IDR) terms. However, these periods can also count towards PSLF for borrowers who were working in qualifying public service jobs during the periods that can be credited.
The IDR Account Adjustment is ongoing. According to an Education Department official, 90,000 of the 360,000 borrowers already approved for student loan forgivenes under the Limited PSLF Waiver were able to get deferment and forbearance periods credited towards PSLF through the IDR Account Adjustment.
The Education Department is continuing to process PSLF applications that were already submitted before the October 31 deadline, and that process is expected to continue…