For many student loan borrowers, the CARES Act, which paused student loan repayment and drove interest rates to 0.0%, was an extraordinary gift. Since that time, student loan borrowers have been on a wild rollercoaster ride. From expanded forgiveness under the Limited PSLF Waiver program that ended in October of 2022, to the IDR Account adjustment, to the promise of one-time forgiveness. It’s enough to make your head spin. So, what’s the status of loan forgiveness now? Unfortunately, we are still waiting to find out.
- Many borrowers are still waiting for forgiveness under the PSLF waiver program as applications continue to be processed.
- Many borrowers are still waiting for forgiveness or a payment count adjustment under the IDR Account Adjustment.
- And I think all of us are waiting to learn the fate of student loan forgiveness under Biden’s one-time forgiveness plan.
The Limited Public Service Loan Forgiveness Waiver- Ended October 31, 2022
The application period for the Public Service Loan Forgiveness (PSLF) Waiver closed October 31, 2022. The waiver expanded what was counted as a “qualifying payment” making many borrowers suddenly eligible for forgiveness. The purpose was to correct many of the management errors that plagued the Public Service Loan Forgiveness program. Unfortunately, many borrowers are still wondering when they will see their payment count updated or receive confirmation that they qualify for forgiveness.
Public Service Loan Forgiveness is a federal program that forgives the remaining balance on Direct Loans for borrowers who are employed in certain public service jobs and make 120 qualifying payments on their loans. This program is designed to encourage individuals to pursue careers in public service.
As mentioned, the Limited PSLF Waiver expanded eligibility for forgiveness under PSLF. While borrowers still had to make 120 qualifying payments and work full-time for a qualifying employer, the program allowed for the following changes:
- Borrowers could consolidate non-qualifying loans into a Direct Consolidation Loan and thereby qualify all their loans for forgiveness
- Past periods of repayment while you were employed for a qualifying employer were counted even if you were not in a qualifying repayment plan
- Periods of forbearance of greater than 12 months or 36 months cumulative were counted
- COVID-19 forbearance periods count towards the 120 required payments
Below is a great chart summarizing the changes from StudentAid.gov:
| Normal PSLF Requirements | Limited PSLF Waiver |
| · Receive credit only on Direct Loans | · Receive credit for periods of repayment on Direct, FFEL, or Perkins Loans |
| · Repay under the 10-year Standard Plan or an income-driven repayment plan | · Periods of repayment under any plan count |
| · Make on-time payments | · Periods of repayment on loans before consolidation count, even if on the wrong repayment plan |
| · Work full time for a qualifying employer to receive credit | · Periods of repayment where payments were late or for less than the amount due also count |
| · Must work for a qualifying employer at the time of application and forgiveness | · Periods of repayment on loans before consolidation count, even if paid late or for less than the amount due |
| · If you got Teacher Loan Forgiveness, the period of service that led to your eligibility cannot count toward PSL | · Can get forgiveness even if not employed or not employed by a qualifying employer at the time of application and forgiveness |
| · If you got Teacher Loan Forgiveness, the period of service that led to your eligibility can count toward PSLF if you certify PSLF employment during that period | |
If you submitted your application for PSLF prior to October 31, 2022, the Department of Education will review your loan history and application under the expanded rules.
If you missed the October 31, 2022 deadline (and meet all the other qualifications) does that mean you are out of luck? Not exactly…
The Income Driven Repayment Count Adjustment- A One-Time Fix
Income-Driven Repayment (IDR) is a type of student loan repayment plan that bases your monthly payment amount on your income and family size. While there are benefits to these repayment plans, they also increase the total interest paid and can ultimately leave you owing more. Income Driven Repayment Plans are designed for the remaining balance to be forgiven after 20-25 years of repayment. Unfortunately, many borrowers did not understand the rules of qualifying repayments and ended up not receiving forgiveness even after paying on their loans for decades.
To address these issues, the Department of Education announced the Income Drive Repayment Count Adjustment. This lesser-known account adjustment allows the Department of Education to make a retroactive credit to payment counts for borrowers in Income Driven Repayment plans. Under the program, time in repayment that is counted towards forgiveness will include:
- Any months in a repayment status, regardless of the payments made, the type of federal loan, or the specific repayment plan;
- 12 or more months of consecutive forbearance, or 36 or more months of total forbearance;
- Any months spent in economic hardship or military deferments after 2013;
- Any months spent in any deferment (except for in-school deferments) prior to 2013;
- Any time in repayment on earlier loans prior to consolidation of those loans into a consolidation loan.
While the changes above apply to Direct Loans, borrowers with non-Direct Loans or FFELP loans can still benefit from the program. Borrowers have until May 31, 2023, to consolidate from non-Direct Loans or FFELP loans into a Direct Consolidation Loan.
Can the Income Drive Repayment Count Adjustment help borrowers pursuing Public Service Loan forgiveness, even if they missed the PSLF Waiver deadline?
The short answer is yes. This one-time adjustment counts towards time-based forgiveness and Public Service Loan Forgiveness. The Department of Education will review borrower accounts and automatically update payment counts to include payments eligible under the expanded rules. If you are pursuing PSLF, and have questions, reach out to an advisor as soon as possible. It’s not too late.
Repaying student loans and navigating repayment plans gets complicated. If you have student loans and aren’t sure what you may qualify for, reach out for assistance. The best thing you can do is talk to an experienced professional.
One Time Forgiveness
After a lot of waiting, media announcements, and more waiting, the application for one-time student loan forgiveness opened in October 2022. The legality of blanket forgiveness was promptly challenged in court. Currently, the fate of receiving between $10,000-$20,000 of forgiveness on student loan debt rests with the Supreme Court.
The Supreme Court began hearing arguments February 28, 2023. A verdict is expected by June of 2023. For now, we will wait.
Repayment and Interest Rate Pause
In the meantime, remember that pause on federal student loan interest and payments that started back in March of 2020? The pause on repayment and reduction of interest rates to 0.00% has been extended multiple times. It’s been extended again and the latest extension reads like this:
“The student loan payment pause is extended until the U.S. Department of Education is permitted to implement the debt relief program or the litigation is resolved. Payments will restart 60 days later. If the debt relief program has not been implemented and the litigation has not been resolved by June 30, 2023 — payments will resume 60 days after that. We will notify borrowers before payments restart.”
Where Things Stand
We are all still waiting—waiting for payment counts to update, waiting for PSLF forgiveness applications to process, waiting for payments to resume, and waiting for the Supreme Court decision on forgiveness. For now, start planning for payments to resume. You can check your income certification dates by logging into your loan servicer website. You can calculate your payments under different repayment plans by logging into StudentAid.gov. As always, if you have questions, don’t hesitate to contact one of our advisors.