4 Things To Know About the Public Service Loan Forgiveness Program Overhaul

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If you work in a public sector job or are a member of the armed forces, and you’re struggling with a federal student loan, major changes announced recently by the U.S. government aim to make it easier for you to get out of debt.

The U.S. Department of Education has overhauled the Public Service Loan Forgiveness Program (PSLF).

In this article, I'm going to go over some key aspects of the program and how the U.S. Department of Education (DOE) promises to help.

"Borrowers who devote a decade of their lives to public service should be able to rely on the promise of Public Service Loan Forgiveness," U.S. Secretary of Education Miguel Cardona said in a news release. "The system has not delivered on that promise to date, but that is about to change for many borrowers who have served their communities and their country."

What Is the Public Service Loan Forgiveness Program?

It’s a federal program put in place to forgive the student loan debt of Americans who work in the military and in certain areas of public service such as nursing, teaching or firefighting.

When your loan is forgiven, it means that your debt is wiped clean, and you no longer have to make payments. You do not receive reimbursements for past payments made on your loan(s).

To qualify to have your student loan(s) forgiven under the PSLF Program you have to:

  • Agree to a qualifying repayment plan.
  • Be employed full-time by a qualifying employer (typically for a local, state or federal government or a not-for-profit organization).
  • Have a history of making 120 on-time monthly payments toward your student loan.

4 Things To Know About the PSLF Program Overhaul

Let’s go over some changes to the PSLF program as listed by the DOE. You’ll want to pay close attention to the deadlines.

1. Are All Prior Federal Student Loan Payments Eligible To Be Counted Toward PSLF?

The PSLF program has traditionally applied only to the William D. Ford Federal Direct Loan (Direct Loan) Program. Under the DOE's plan, the PSLF program will also include the following loan types as well:

That means if you've made any prior payments on your student loans while working for a qualified employer, they'll will be counted toward your eligibility for forgiveness for a period of time as part of a "Limited PSLF Waiver," according to the DOE.

This waiver allows for borrowers to combine their FFELP and Perkins loans into one loan.

2. When Is the Deadline for Loan Consolidations?

If you have more than one eligible loan, you have until Oct. 31, 2022, to submit to have your loans consolidated. The DOE suggests that you do so with this online PSLF Help Tool.

Borrowers who have already consolidated their federal loans or are in the process of doing so will be automatically included in the Limited PSLF Waiver, according to the DOE.

3. Will You Get Credit for Payments That Previously Failed To Qualify for PSLF?

Payments previously disqualified due to “technical requirements,” such as payments made late or in an incorrect amount, will be counted toward the PSLF, according to the DOE.

"The Department will automatically adjust PSLF payment counts for payments made on or before Oct. 31, 2021, for borrowers affected by this issue who have already certified some employment for PSLF," a DOE fact sheet brings out. "Borrowers who have not yet applied for PSLF forgiveness or certified employment but do so by Oct. 31, 2022, will benefit from these temporary rules as well."

4. Can PSLF Applications That Were Previously Denied Now Be Approved?

PSLF applications that were previously denied will be reviewed to correct any processing errors and discrepancies, the DOE says.

In addition to correcting those issues, the DOE says the overall PSLF application process will be made easier for military members.

Those on active duty will be allowed to count that time toward PSLF, the DOE says. This will be the case regardless of whether the military member’s loans were in active repayment, forbearance or deferment.

“This change addresses one major challenge service members face in accessing PSLF,” the program’s fact sheet says. “Service members on active duty can qualify for student loan deferments and forbearances that help them through periods in which service inhibits their ability to make payments. But too often, members of the military find out that those same deferments or forbearances granted while they served our country did not count toward PSLF.”

Final Thoughts

The DOE says that the new procedures to the PSLF program will be rolled out over the next several months.

If you’ve already consolidated your loans and certified your employment, the DOE says you can expect your prior payments to be credited to your account(s) automatically in the months ahead.

As mentioned earlier, if you haven't consolidated your federal student loans, you must do so before Oct. 31, 2022.

See StudentAid.gov for more information on federal student loan repayment options.

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