Who qualifies for the $6 billion student loan forgiveness announced by the Biden administration

Last week, the Biden administration announced it had identified 100,000 borrowers who will receive $6.2 billion in student loan forgiveness — the latest wave of relief the administration is giving struggling borrowers.

But the loan forgiveness was pre-approved under a specific program with specific eligibility criteria. Here’s who qualifies.

Public Service Loan Forgiveness (PSLF) and Limited Waiver

The administration’s announcement last week related to the Public Service Loan Forgiveness Program (PSLF). The PSLF, which was first created in 2007, is a federal loan cancellation program that can allow borrowers to eliminate their loans after 120 “qualifying payments” over 10 years (or more).

The original PSLF eligibility rules that defined an “eligible payment” were a bit confusing for borrowers. These problems were exacerbated by poor communication from loan managers and inadequate oversight by the Ministry of Education. Under these original rules, an eligible PSLF payment was one that was made:

  • On a direct federal student loan. Payments made on other federal loans, such as former FFEL program loans and federal Perkins loans, were not eligible.
  • As part of an income-based repayment plan or the standard 10-year repayment plan. Payments made through other plans, such as extended or graduated repayment plans, did not count.
  • While working as a full-time employee for a nonprofit organization or eligible public entity. Part-time employment could also count, as long as the borrower has at least two eligible public service employers and their combined hours are at least 30 hours per week on average.

Due to PSLF’s problems, the program has long suffered from low approval ratings. So the Biden administration created a temporary fix last October called the “Limited PSLF Waiver” program, or “waiver” for short. Under the waiver, the Ministry of Education temporarily modifies two of the three rules of the PSLF:

  • Prior repayment periods on FFEL loans and Perkins loans may be counted, provided the borrower consolidates such loans under the Federal Direct Consolidation Loans Program (if they have not already done so) to “convert” these non-direct loans into direct loans. to lend.
  • Any repayment period may be eligible for PSLF under the waiver, regardless of repayment plan, whether payments were made in full or on time, and whether payment was made before or after direct loan consolidation. .

Automatic Student Loan Forgiveness under the PSLF Waiver for Certain Borrowers

The Department of Education has indicated that many borrowers may qualify for student loan forgiveness or an update to the number of eligible PSLF payments automatically through the waiver if they have already consolidated their non-direct federal loans in a direct consolidation loan and submitted the required forms certifying their employment in the public service. . The department said federal student aid staff will review borrowers’ accounts and update their PSLF payments in accordance with the PSLF waiver rules. The vast majority of the 100,000 borrowers who qualify for the latest wave of student loan forgiveness likely fall into this category.

Other borrowers will need to take action to qualify for student loan forgiveness under the PSLF waiver

However, not all student loan forgiveness through waiver will be automatic. Borrowers who still have FFEL loans and Perkins loans and who will benefit from the waiver will need to consolidate those loans through the Federal Direct Consolidation Lending Program. And borrowers who have not yet certified their employment by submitting the PSLF employment certification forms should do so.

The PSLF waiver is temporary and expires on October 31 this year. Thus, borrowers who need to take certain actions have a limited window of time to act. The Ministry of Education has created a detailed website with tips on who qualifies for the PSLF waiver and how to apply. Officials estimated that hundreds of thousands more borrowers could eventually receive or come much closer to loan forgiveness.

Department of Education updates guidance on PSLF waivers

For borrowers who must consolidate their federal loans through the Federal Direct Consolidation Loan Program to qualify for the PSLF waiver, the Department of Education recently updated its guidelines to explain how payments will be counted.

According to the new guidelines, “Assuming your repayment history overlaps for each loan [that is being consolidated], the consolidation loan will be credited with the highest number of repayments of the loans that have been consolidated. For example, if you had 50 qualifying payments on one subsidized Stafford loan and 100 qualifying payments on another subsidized Stafford loan and you consolidate those loans, you will receive 100 qualifying payments on the new direct consolidation loan. If your repayment history does not overlap for each loan, the consolidation loan may be credited more than the loan with the highest number of payments. This may allow many more borrowers to reach the loan forgiveness threshold.

Further Reading on Student Loans

Biden could extend student loan suspension and plans to forgo loans, White House official says

Student loan forgiveness denied? Biden administration unveils appeals process

Thousands of Jobs Qualify for Expanded Student Loan Forgiveness Program

4 Signs Student Loan Forgiveness Is Not Out of Order

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