Temporary relief measures were implemented on October 6, 2021, by the U.S Department of Education for the federal student loan Public Service Loan Forgiveness (PSLF) program under which borrowers may receive credit for payments that previously did not qualify. The U.S. Department of Education has made this specific change to last only until October 31, 2022. There are some key changes that could provide beneficial amounts of loan forgiveness to the right borrower. Although, the best thing you can do to see if you apply is to reach out to your loan servicer. In this blog, I will briefly explain what looks different for this next year regarding the Public Student Loan Forgiveness program. Borrowers should review all of the details of this temporary relief at https://studentaid.gov/announcements-events/pslf-limited-waiver.
Before the announcement was made on October 6, 2021, there were many qualification rules that made it difficult for borrowers to receive any forgiveness from PSLF. The borrower still needs to be employed full-time by a U.S. federal, state, local, or tribal government, 501(c)(3) nonprofit or other nonprofit organization that provides qualifying services. They still need to be direct federal loans or consolidated into direct loans to qualify. The borrower still must make 120 total payments but past ineligible payments may now count.
With the new announcement, a qualification that has been waived is that the person no longer had to be enrolled under an income-driven repayment plan. Now, past payments under any type of plan will count toward the potential credit.
If the person needs to consolidate to direct loans, then that will need to be done before October 31, 2022. This means that if you have outstanding FFEL and/or Perkins loans, you will need to consolidate them to direct loans as well. Parent PLUS loans will not be eligible for this temporary PSLF waiver. Under normal PSLF Program rules, if you consolidate your loans, only qualifying payments that you make on the new Direct Consolidation Loan can be counted toward the 120 payments required for PSLF. Any payments you made on the loans before you consolidated them don’t count. However, if you consolidate these loans into a Direct Loan before October 31, 2022, you may be able to receive qualifying credit for prior payments made on those loans through the limited PSLF waiver.
There will be an updated PSLF help tool on the studentaid.gov website soon at https://studentaid.gov/pslf/. It will account for the new changes that have taken place in regards to processing FFEL and Perkins loans and how to consolidate them. Right now, step 1 of the help tool is available to verify that the borrower’s employment is PSLF certified. In the coming months, the rest of the tool will be helpful to determine if the temporary credit on past loan payments is applicable.
If you believe that this change is something that could apply to you, there are four main steps to take (https://studentaid.gov/announcements-events/pslf-limited-waiver): 1) Verify your loan types and amounts. 2) Verify that your employment meets the PSLF requirements using Step 1 of the PSLF Help Tool. (This part of the tool is available right now.) 3) If your employer is eligible but you need to consolidate to all direct loans, then request consolidation by October 31, 2022. 4) Submit a PSLF form with the PSLF Help Tool by October 31, 2022. (This is the part of the tool that will be available very soon.)
This is a time-sensitive opportunity, so please reach out to your loan servicer soon and take the necessary steps to see if this is a beneficial opportunity as soon as you can. If you have questions, Powercat Financial can also meet with you in-person or virtually through zoom. To schedule an appointment, please visit our website: https://www.k-state.edu/powercatfinancial/.
Now for a not so serious topic, we have a fun event coming up called “Thrifty Gifting!” This is a great event for anyone that needs help managing their money during the holiday season. There will be free festive food, fun games, and cool prizes from local businesses. The event will take place on Thursday, November 4th at 4:30pm in the Student Union Room 227. We hope to see you there!
Laura Peterson
Peer Counselor II
powercatfinancial@ksu.edu
www.k-state.edu/powercatfinancial
