453,000 borrowers approved for student loan forgiveness under waiver as processing continues

Nearly half a million people have been approved for federal student loan forgiveness under a one-time waiver program for borrowers who work in public service jobs.

Processing continues. Many more borrowers may eventually qualify, even as another Biden administration initiative — a one-time mass student loan relief plan — remains blocked by federal courts.

Student loan forgiveness picks up pace under PSLF waiver

Public Service Loan Forgiveness (PSLF) is a federal student loan forgiveness program that can eliminate federal student loan debt for borrowers committed to public service careers. After 120 “qualifying payments” (equivalent to 10 years) while working for approved nonprofit or government employers, borrowers can receive full discharge of their federal student loans.

Historically, the PSLF has been a troubled program since its creation in 2007. The PSLF has complex eligibility requirements and complex rules regarding what counts as “qualifying payments” for loan forgiveness. Simple errors, either by the borrower or the loan servicer, can lead to permanent problems.

The Biden administration implemented the Limited PSLF Waiver in 2021 to address these problems. Under the waiver, the Department of Education issued emergency rules relaxing the original PSLF rules and expanding the definition of “qualifying payments” to past loan periods. This allowed many borrowers to accelerate their progress or reach the limit for full federal student loan forgiveness.

The limited PSLF waiver officially expired last fall. However, the Department of Education and its contracted PSLF loan servicer, Mohela, continue to process applications. “As of the beginning of February 2023, approximately 453,000 borrowers have qualified for forgiveness under the limited PSLF exemption,” the Department of Education said in a recently published data summary.

More student loan forgiveness is expected to be approved under the waiver in the coming months. “Though the limited PSLF waiver period has ended, some borrowers have submitted their applications before the last date [of October 31, 2022] According to the Department of Education, processing of their applications may continue beyond the grace period. And the process is getting faster, as some borrowers are reporting improvements over previously very long processing times.

Student Loan Forgiveness Benefits of PSLF Exemption Expanded Under IDR Account Adjustment

While the limited PSLF exemption expired last October, the Biden administration extended many of its benefits through a separate but related initiative called the IDR Account Adjustment. Under this program, the Department of Education can credit borrowers under Income-Driven Repayment (IDR) plans over time for their 20- or 25-year student loan forgiveness periods. Most past periods of loan repayment, as well as some prior periods of deferment and forbearance, may count toward student loan forgiveness as part of the account adjustment, even for borrowers who are not in the IDR plan. .

IDR account adjustment benefits may also apply to student loan forgiveness under the PSLF program for borrowers who were working in qualifying public service employment. According to guidance from the Department of Education, “These changes will automatically apply to all PSLF-eligible Direct loans, including consolidated and non-consolidated Parent PLUS loans.” The department estimates that more than 3.6 million borrowers will receive at least three years of credit for student loan forgiveness under the initiative.

Some borrowers may need to take action to benefit from IDR account adjustments, such as submitting a PSLF employment certification form or consolidating non-direct federal student loans through the federal direct consolidation program. The Department of Education says, “If you believe you may benefit, you should update your employment certification history to reflect all periods of public service employment.” “Borrowers with commercial or federally held FFEL loans who consolidate those loans into Direct Consolidation Loans before the account adjustment applies will also receive a PSLF credit.”

Education Department has recently updated the timeline for IDR account adjustments. Borrowers with FFEL-program loans now have to consolidate through the Direct Loan program to qualify, have until the end of 2023 to do so. Implementation of the account adjustment is now expected sometime in 2024.

Waiver Initiatives Separate From Biden’s One-Time Mass Student Loan Forgiveness Plan Before Supreme Court

Importantly, both the limited PSLF waiver and the IDR account adjustment are entirely separate from Biden’s separate initiative to provide $10,000 or $20,000 in student loan forgiveness to millions of borrowers. That plan has been blocked by federal courts in response to legal challenges, and the Supreme Court is set to rule on the legality of the program by this summer.

Meanwhile, congressional Republicans have launched an effort to repeal Biden’s student loan forgiveness plan through an expedited process under the Congressional Review Act. However, the effort is unlikely to overcome an expected veto by President Biden.

Further Reading Student Loan Forgiveness

Republican effort to repeal Biden’s student loan forgiveness plan gains steam

What happens if the Supreme Court rejects Biden’s student loan forgiveness plan?

Student loan forgiveness: Whether Biden stops payments again depends on Supreme Court ruling

Potential student loan forgiveness loophole could cause problems and confusion for consolidating borrowers