By Andrew Paulson, CSLP, Lead Student Loan Consultant and Co-Founder of our partner site StudentLoanAdvice.com

The Public Service Loan Forgiveness (PSLF) waiver has been life-changing for many borrowers. But remember, it expires on Halloween this year, so if you were planning to take advantage of this limited-time offer, make sure to get it done before October 31.

Early on, when the waiver was first announced in October 2021, we thought the waiver would be pushed back again because many borrowers would not hear about it in time or would be doubtful of the implementation. However, it seems extremely unlikely the PSLF waiver goalpost will be moved again, especially with President Biden's Student Loan Forgiveness (application now available) plan now at the forefront. Also, I am beginning to see the IDR waiver implemented for student loan clients.

Let’s talk about the PSLF waiver first, because it's the highest priority with the upcoming deadline. Then, we’ll cover IDR.

 

What Is the Public Service Loan Forgiveness Waiver?

The PSLF waiver is a temporary waiver that relaxes a number of rules for the PSLF program until October 31, 2022. The PSLF program has been riddled with complexity, and many believe the waiver was passed to help offset some of the damage done to older borrowers with regard to the PSLF program.

More information here:

Does PSLF Work? PSLF Success and Why the Current Changes Matter

 

Who Does the PSLF Waiver Apply To?

This waiver mainly applies to those who were making payments on Family Federal Education Loans (or FFEL) loans. It also affects borrowers who made payments in ineligible repayment programs, such as the extended or graduated repayment program. Further, I’ve seen borrowers who have different monthly payment credits for PSLF on their federal student loans benefit when they consolidate their loans together. In doing so, they will take the loan with the longest repayment history and apply it going forward, so if you consolidate two loans together, they’ll take the loan with the highest payment credits. Let me illustrate with an example.

A doctor who borrowed for undergraduate and medical school is now beginning PGY-2. They graduated in May the year prior and began residency July 1. They complete their first PSLF certification form by having their program director sign it and then send it to the loan servicer. The loan servicer will send them an email with how many payments count to PSLF. Their undergrad loans would show 12 months or one year of PSLF credit, and their med school loans would have 5-6 months of credit. The discrepancy in payments is due to the time the med school loans were in the grace period. The borrower most likely used up the grace period on the undergraduate loans before med school. Grace periods don’t count toward PSLF even if you make a payment.

As a result, medical school loans and undergrad loans will often have a difference in payment credits. Thus, if this borrower stays on track to PSLF, they will receive forgiveness twice. First, in 108 months, and the second one in 114-115 months.

The PSLF waiver allows a borrower to consolidate loans with different payments together and have the loan with the longest repayment history applied to all loans. The result would be this doc receives forgiveness at 120 payments from med school and likely recoups five to six months of future payments.

Please note: this strategy will not work when the waiver expires on November 1. The old rules pertaining to consolidation will revert, and consolidation erases ALL prior payments.

More information here:

How to Ensure Student Loan Forgiveness Through the PSLF Program

 

What Has Been the Impact of the PSLF Waiver?

Since the PSLF waiver, the overall number of borrowers who have seen their loans forgiven via PSLF has increased exponentially. PSLF was created in October 2007, and borrowers first began to receive forgiveness 10 years from that point in October 2017. From October 2017-September 2021, about 16,000 borrowers received forgiveness. As of mid-August 2022, there have now been 211,000 borrowers who have received forgiveness. That’s a percentage increase of 1,219%. The vast majority of the nearly 200,000 who have received forgiveness in the last year has been a direct result of the PSLF waiver.

So, if you are on the fence, it has never been a better time to throw in an application to get this time-limited forgiveness.

 

Do I Still Have Time to Apply for the PSLF Waiver?

Yes, you do. Sure, this should have been done yesterday, but many of us procrastinate—and perhaps people wanted to see how this all played out. I don’t know if it could have turned out better now that more than 200,000 borrowers have received forgiveness.

If you have FFEL/Perkins loans and would like to apply for PSLF, you need to consolidate your student loans now. The absolute last day you can send in this application is October 31, but I know for a fact that studentaid.gov is going to be inundated with requests so don’t wait until the 11th hour. If you already have direct loans, you probably don’t need to consolidate your loans now unless you just graduated this spring/summer or have loans with different PSLF counts.

After you submit your consolidation, you need to complete your PSLF certification form. That is the employer certification form which must be signed by your current or past employer(s). This is to be sent only to employers that would qualify as a nonprofit or 501(c)(3). Studentaid.gov has a PSLF help tool that allows you to check employer eligibility. These also need to be submitted by October 31 to qualify under the limited waiver. The process of having these forms signed can take time. So, don’t wait until the last minute to have them signed and submitted.

Please note: even if you completed a direct federal consolidation and it is not yet processed by your loan servicer, you can still submit your PSLF certification forms. You probably won’t be able to use the nifty file upload, but you can send it via fax or mail. My recommendation is to use certified mail if you can’t use the file upload.

More information here:

Is Public Service Loan Forgiveness Worth It for Doctors?

 

Do Commercially Held FFEL Loans Change My Eligibility for the PSLF Waiver?

No, this only pertains to Biden student loan forgiveness. You had to consolidate your commercially held FFEL loans by September 29 to be eligible for the $10,000-$20,000 of forgiveness.

 

Income-Driven Repayment Waiver

I’ve written about the IDR waiver sporadically over the last year but want to highlight what it means for borrowers, because I've started to see client accounts FINALLY changing due to the waiver. The IDR waiver, unlike the PSLF waiver, is not just impacting a small segment of federal borrowers who are in public service. This waiver impacts all federal borrowers with some eligible for immediate forgiveness, not only through PSLF but also those on taxable (20- to 25-year) forgiveness. This waiver is set to expire end of 2023.

 

What Does the IDR Waiver Do?

The Department of Education (ED) will conduct a one-time adjustment to count long-term forbearances to PSLF and IDR forgiveness. The ED has said this will be implemented by fall 2022.

Here are the criteria for what counts as credit:

  • Forbearances for 12 consecutive months or longer OR more than 36 months in total.
  • Any months in repayment, regardless of the payments made, loan type, or repayment plan.
  • Any month in deferment prior to 2013, excluding in-school deferment. Additionally, months in economic hardship deferral on or after January 1, 2013 would be included.

With forbearances shorter than the criteria provided above, contact the student loan ombudsman, and file a complaint to have them review your situation.

This means if you put your loans into forbearance for four years during residency, you could be eligible to receive four years of payment credit to IDR and PSLF forgiveness.

PSLF has a tracker on the PSLF servicer’s site which shows your progress, and it will automatically update when the IDR waiver is applied. IDR forgiveness will automatically be updated, but there isn’t a built-in tracker yet. However, the ED has mentioned as part of the IDR waiver that a tracker for IDR forgiveness will be created.

 

How Will I Know the IDR Waiver Is Applied to Me?

In your payment history on your loan servicer's website, you should be able to see certain forbearances/deferment periods of time where “Special Waiver” will be visible. Here’s an example in MOHELA (federal loan servicer)

 

Here are some other questions regarding the IDR waiver:

How long does it take for my servicer to implement my new payment count after the IDR waiver is applied?

I have seen it implemented for some borrowers already. Other borrower accounts are being updated as we speak. I don’t have a definite timeframe on how long it will take for this to happen to all borrowers, but I anticipate it could be weeks or even months to be completely rolled out.

PSLF and IDR waiver

If I'm pursuing PSLF, do I need to submit PSLF certification forms for periods under the IDR waiver to count?

Yes, to receive PSLF credit, you have to submit PSLF certification forms for your periods of forbearances that you would like to have counted.

Do commercially held FFEL loans qualify for the IDR waiver?

No, they don’t. You need to complete a direct federal consolidation for the loans to qualify. Also, it's been said that you must have this completed prior to implementing the waiver. The estimated date of implementation is January 1, 2023, so don’t delay on consolidation if you’d like these loans to qualify as well.

 

The PSLF waiver has demonstrated that loan forgiveness can work for borrowers if they are working in public service. If you’re trying to complete this last minute and want to ensure you’re doing it right, our expert team at StudentLoanAdvice.com has helped hundreds of borrowers this year with the PSLF waiver. We are well-versed in both waivers, and we can project exactly when you’ll have conquered your loans. Don’t delay and set up a time with them today!

Have you applied for either student loan forgiveness waiver? How has it worked out for you? If not, are you still planning to take action before the deadline? Comment below!