The Public Service Loan Forgiveness waiver ends Oct. 31, but the Biden administration is making it easier for borrowers in the future.


The exemption that temporarily expands eligibility for the Public Service Loan Forgiveness Program expires on October 31st. But the Biden administration said Tuesday it is taking steps to make it easier for borrowers to get rid of their debt in the future.

Many Democrats have called on the Biden administration to extend the PSLF waiver, which is aimed at public sector workers. More than 236,000 loans have been approved in the past year thanks to more than $14 trillion in forgiveness, but more people were expected to qualify.

Instead of extending the waiver, the Biden administration is making some permanent changes to the program that will take effect in July 2023. These moves are separate from President Joe Biden’s interim plan for student loan forgiveness, which would have canceled up to $20,000 in student loans. Loans for low and middle income borrowers. That program is on hold while a federal appeals court considers a legal challenge against the program.

“Now, as we emerge from the pandemic and as the waiver period ends, we are focusing on making this program work for the long term,” Education Secretary Miguel Cardona said about the PSLF in a call on Tuesday.

The PSLF program cancels the remaining federal student loan debt for eligible government and nonprofit employees after making 120 monthly payments over a minimum of 10 years. There is no cap on the amount of student debt relief, so PSLF can offer a more generous benefit than Biden’s temporary forgiveness program classify Some borrowers may be eligible for both relief programs.

But the PSLF program has been fraught with problems. Before Biden announced temporary changes to the program, many borrowers reached 10-year repayments, hoping they could cancel their remaining debt, but instead found out they had the wrong loan or were making payments on the wrong repayment plan. . In 2019, the US Government Accountability Office found that about 99% of PSLF applications were rejected.

The administration is still encouraging borrowers to apply for a PSLF waiver before October 31 to eliminate debt. While many of the benefits of the waiver will be in place after July 2023, borrowers who do not work for a qualified employer or who have benefited from Teacher Loan Forgiveness, in particular, must still be applied for before October 31st.

The Department of Education will officially change some of the PSLF program rules through updated federal rules that will take effect in July.

The changes will allow borrowers to receive PSLF credit for late, partial or one-time payments. The previous rules counted a payment as eligible in its entirety within 15 days of the due date.

Under the new rules, time spent during certain deferment or forbearance periods will count towards PSLF. These periods include delays in cancer treatment, military service, financial hardship, and time spent in AmeriCorps and the National Guard.

The new rules will also simplify the criteria for the borrower to be a full-time employee in a public sector job. The new rule will consider full-time employment of 30 hours per week. In particular, the change will help qualify additional public school teachers for the program.

Under the revised regulations, borrowers will receive some credit for past payments when they consolidate old loans into direct federal loans in order to qualify for the program. Loans previously forfeited all advances for forgiveness when they were consolidated. After July, they will receive a weighted average of their available PSLF payments.

The Biden administration announced Tuesday that it will begin implementing a policy change related to the payment count in April. and will automatically update the accounts for some loans.

The interim updates will begin in November and many borrowers – including those who are not public sector workers – are expected to move closer to forgiveness.

Some borrowers will see past payments counted, correcting past mistakes in counting payments for forgiveness.

The interim count applies to lenders known as the Income Repayment Program, or IDR. The program, which offers four types of repayment plans, allows borrowers to avoid loan defaults by reducing monthly payments based on income and family size. IDR also promises loan forgiveness after 20 to 25 years of payments, depending on the specific plan.

Revisions may also result in additional credit to the PSLF if the borrower has secured suitable employment. Borrowers must be enrolled in an IDR plan to be eligible for PSLF.

For borrowers who do not currently qualify for a federal Direct Loan, they must apply for consolidation by May 1, 2023, to receive the full benefits of the temporary account adjustment.