With just under a week until the Public Service Loan Forgiveness (PSLF) Limited Waiver expires, the Department of Education issued new guidelines to help transition back to the standard PSLF rules. These changes allow borrowers more time to ensure their payments qualify and expand how payments are counted. There are a lot of overlapping programs working together, so we wanted to break down the most common questions our team is fielding right now:
Is this an extension of the PSLF Limited Waiver?
Not officially, but it does extend some of the waiver’s benefits a few months and gives extra flexibility to borrowers to get additional qualifying months for PSLF.
So, what were the updates?
There are two main components of the announcement:
- Confirming the IDR Adjustment: In April 2022, the Department of Education launched a similar one-time initiative to the PSLF Limited Waiver that specifically targeted income-driven repayment (IDR) plans. Because IDR and PSLF work together for borrowers in public service, these changes mean that borrowers will see additional payments qualify for both programs, particularly those made during time in forbearance and in other repayment plans that wouldn’t have previously qualified. It also means there’s an extended window for payments made before consolidation to count toward both programs. You can read Summer’s summary of those changes here.
- Additional improvements to PSLF that could be implemented in July 2023: These aren’t confirmed yet but include promising changes like counting “late, partial, and lump sum payments” toward PSLF, as well as certain deferments and forbearances if you were working full time in public service. It also specifies that PSLF timelines won’t be reset by consolidation. This fact sheet goes into more detail, and we should get an official announcement confirming the details in November 2022.
Is there anything I need to do?
1. If you already have Direct loans and have submitted employment certification forms for your past public service employment, there’s nothing else you need to do! You may see additional qualifying payments added to your payment count for periods in select forbearances and deferments. That adjustment will happen automatically between now and 2024, depending on how close you are to end of your payment timeline.
2. If you have FFEL that haven’t been consolidated yet, there may still be time to count past payments on those loans toward PSLF. You’ll need to consolidate these loans (and certify your employment) so that past payments on those loans will qualify for PSLF.
3. If you haven’t certified your employment yet, now is a great time to finish that process. You’ll want to complete one employment certification form for each employer you’ve had in public service since October 2007, when the PSLF program was first created. (If you’ve already certified your former employers once, you shouldn’t need to do it again!)
What’s the deadline?
If you have loans that need to be consolidated (loans that are not Direct loans), you can consolidate before December 31, 2023 to get the maximum benefits from PSLF. There’s not a strict deadline for certifying your public service employment. The Department of Education says: “The credit awarded as part of the one-time account adjustment can be later counted toward PSLF if the borrower certifies employment.”
What benefits will not extend past October 31, 2022?
A few elements of the PSLF Limited Waiver won’t be extended through the IDR Adjustment. For example, under the waiver, employment could count toward both Teacher Loan Forgiveness and PSLF — that will no longer be the case, and borrowers will need to choose between the two programs. The waiver also temporarily removed the requirement that you need to be employed in public service at the time you get forgiveness. That will also go back to the standard PSLF rules in October.
When will I hear back about how all these updates apply to me?
The Department of Education is working to make these changes by next summer. We know many of you are also waiting to hear back on all of the consolidations and employment certification forms you submitted during the PSLF Limited Waiver. MOHELA, the loan servicer that now handles the program, is taking up to three to four months to process forms, and it might slow down even more given the influx they received in October. Eventually, you’ll get an update on the qualifying payments you’ve made toward PSLF on each loan. If you’re not already ready for forgiveness, you may get a second update once all of these changes go through.
We know how confusing these rules and changes can be, and this may be one of the more complicated policy updates we’ve seen so far. We’ll continue to keep you up to date as we learn more — thanks for sticking with Summer!
If you’d like personal assistance navigating the changes, Summer partners with employers to offer its digital solution and support team as a benefit to employees. Share this post with an HR leader in your organization today and have them book time with us to start the process.