Education

Student Loan Forgiveness: Education Department Clarifies Rules For Expanded New Program – Forbes

Summary

DETROIT, MI – NOVEMBER 17: U.S. President Joe Biden speaks at the General Motors Factory ZERO … [+] electric vehicle assembly plant on November 17, 2021 in Detroit, Michigan. (Photo by Nic Antaya/Getty Images)

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In October, the Biden administration announced significant new changes to Public Service Loan Forgiveness (PSLF), a federal student loan forgiveness program.

Since its inception, the PSLF program has had complicated …….

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DETROIT, MI – NOVEMBER 17: U.S. President Joe Biden speaks at the General Motors Factory ZERO … [+] electric vehicle assembly plant on November 17, 2021 in Detroit, Michigan. (Photo by Nic Antaya/Getty Images)

Getty Images

In October, the Biden administration announced significant new changes to Public Service Loan Forgiveness (PSLF), a federal student loan forgiveness program.

Since its inception, the PSLF program has had complicated eligibility requirements and dismal approval rates. The new changes are intended to address the program’s shortcomings and dramatically expand eligibility to reach more borrowers. But for weeks after its initial announcement, the Department of Education left many details regarding how the program’s expansion would actually be implemented unaddressed. This week, the Department released critical new guidance.

Biden’s Changes To Public Service Loan Forgiveness (PSLF): How It Works

The Department of Education is calling the new program expansion the “Limited PSLF Waiver” program. The waiver program will temporarily relax several rules governing the PSLF program. For most of the next year, the Department will count past payments on non-Direct federal student loans, such as FFEL loans and Perkins loans (which are not eligible for PSLF under the original program rules), towards the 120 “qualifying” payments that a borrower must make to get student loan forgiveness. The waiver will also allow payments made under any repayment plan to count as well; previously, only payments made under income-driven repayment plans and a 10-year Standard plan could qualify.

For some borrowers, relief under the Limited PSLF Waiver program will be automatic. Direct loan borrowers who have already certified their employment, for example, may see their PSLF payment counts automatically adjusted by the Department to reflect the changes under the new waiver program. Thousands of borrowers have already had their federal student loans forgiven through this process.

For other borrowers, action may be required by October 31, 2022. Borrowers who have not yet certified their public service employment will need to do so by submitting the appropriate PSLF Employment Certification form. And FFEL loan and Perkins loan borrowers may need to consolidate their loans through the federal Direct consolidation program, before going through the employment certification process. Until now, the Department has been vague about some key elements of eligibility and procedure for these borrowers.

Student Loan Forgiveness Amidst Loan Servicing Changes

One of the Department of Education’s federal student loan servicers, FedLoan Servicing, has been the primary contractor handling the PSLF program. But earlier this year, FedLoan announced that it would be withdrawing from the Department’s federal student loan system, raising questions about which agency would be handling the Limited PSLF Waiver and associated Direct loan consolidations and employment certifications.

Earlier this month, though, FedLoan and the Department of Education …….

Source: https://www.forbes.com/sites/adamminsky/2021/11/18/student-loan-forgiveness-education-department-clarifies-rules-for-expanded-new-program/