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Big Adjustments to PSLF and FFEL Forgiveness. Pay Attention or Lose Out.

In April 2022, the Department announced one-time improvements to address historical inaccuracies in the count of payments that qualify toward forgiveness under IDR and practices by loan servicers to put borrowers into forbearance in violation of Department rules. As a result of these past failures, borrowers who were in repayment for 20 or 25 years or longer are unable to receive forgiveness under IDR, and borrowers who were in repayment for 10 years or longer while working in public service may not receive PSLF. To address these inaccuracies, the Department will adjust a borrower’s account by granting credit toward IDR and PSLF for:

  • Any month in which a borrower was in a repayment status, regardless of whether payments were partial or late, the loan type, or the repayment plan;
  • Any month in which loans were in an eligible repayment, deferment, or forbearance status before consolidation;
  • Months while a borrower spent at least 12 months of consecutive forbearance;
  • Months while a borrower spent at least 36 cumulative months in forbearance; and
  • Any month spent in deferment (exception for in-school deferment) before 2013.

Beginning in November 2022, borrowers who have 20 years (240 monthly payments) or 25 years (300 monthly payments) of payments through these changes will start receiving loan discharges.

Borrowers who applied for PSLF before October 31, 2022, and reached 120 payments due to the deferment and forbearance changes will also receive loan discharges.

The Department will continue implementing discharges for borrowers who reach the forgiveness threshold in the months after November 2022.

In July 2023, the Department will automatically apply the same payment count treatment to all Direct and Department-managed FFEL loans for borrowers who do not otherwise reach the number of months necessary for forgiveness.

Permanent Improvements to PSLF Regulations

The Department also announced lasting improvements to the PSLF program that will be codified in final regulations. These improvements, which incorporate many elements of the PSLF waiver, include:

  • Allowing borrowers to obtain credit for late, partial, and lump sum payments if the borrower also certifies qualifying employment.
  • If the borrower also certifies qualifying employment, awarding credit for certain months in deferment or forbearance, such as those tied to military service or deferments for economic hardship or cancer treatment.
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A more complete list of the improvements can be found in the fact sheet. The regulations will be published in the coming days and will go into effect on July 1, 2023.

Steps to Qualify for the Limited PSLF Waiver by October 31

The program changes outlined in the fact sheet provide significant benefits to borrowers who have Direct or Department-managed FFEL loans and Direct Loan borrowers seeking PSLF now and in the future. However, any borrower interested in the full benefits of the Limited PSLF Waiver should take action by October 31.

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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