Public Service Loan Forgiveness Limited Waiver Program

Hi everyone, and welcome back to Melissa Making Cents!

Most of you know me as a CERTIFIED FINANCIAL PLANNER™ and a financial coach, which is understandable considering that I am both of those things and the majority of information I write about and pass long with this blog pertains to those positions. However, did you know that I’m also a College Planning and Student Loan Advisor? If you aren’t totally sure what to make of that information don’t worry. It essentially means that I help people create a plan for paying for college!

I don’t know how much you’ve been listening to the news, but there’s been a lot of developments surrounding student loans for college! Specifically, the current presidential administration announced a new plan to help alleviate some of the burdens on middle-class Americans caused by federal student loans (we’ll get into that more later).

A huge talking point that most of my clients are interested in is student loan forgiveness. For years I’ve been fielding and answering questions about student loan forgiveness, debt elimination, etc. For a long time, it really seemed like those things might be a pipedream that we’d wait for but would never come to fruition. However, things are happening! And our subject for today is TIME SENSITIVE, so be ready to get moving if you want to take advantage of the Public Service Loan Forgiveness Limited Waiver Program.

What is the Limited Waiver Program?

Because I’m a realist, and I know that many of you are here for the true meat and potatoes of the conversation – we’re going to jump right in and work on some more in depth explanations later.

According to Federal Student Aid’s website, “The “limited PSLF waiver” refers to the time-limited changes to Public Service Loan Forgiveness Program (PSLF) rules that allow borrowers to receive credit for past periods of repayment that would otherwise not qualify for PSLF.”

What does that mean? To cut straight to the point – the Public Service Loan Forgiveness Program has long been a thorn in the side of many who feel that they should qualify. In the past, it has always seemingly been very strict about following the rules of repayment to the letter, and many who believed that they would qualify were shocked to realize that they didn’t for accidentally neglecting one of the many rules of repayment.

However, this announcement is stating that if you’ve found yourself in the position of disqualification for late payments, neglected payments, or lack of payment in full – you may be able to have those missteps waived and still receive Public Service Loan Forgiveness.

When is the Program Open and When Does it End? (10/31/22)

At the time of writing this, the limited time waiver is CURRENTLY OPEN, but you need to act fast because it CLOSES ON OCTOBER 31, 2022.

Again, pulling information directly from the Federal Student Aid website, “On. Oct. 31, 2022, the limited PSLF waiver ends, and beginning Nov. 1, 2022, we’re going back to the normal program requirements for both PSLF and TEPSLF.”

So if you want to qualify, you do need to act fast by Completing the following tasks before October 31^st.

1. Generate a Public Service Loan Forgiveness tool with the PSLF Help Tool by October 31^st to create a form that will eventually be approved.
2. Use the Help Tool to create a pending review of your employer’s eligibility and your employer later becomes PSLF eligible.
3. Filling out and submitting a Public Service Loan forgiveness tool manually that’s signed and dated before the 31^st that must be later approved.
4. Consolidate and FFEL Loans into Federal Direct Loans.

As you can see, there’s a bit of red tape. And the best option is to create and submit a Public Service Loan Forgiveness form BEFORE OCTOBER 31^st, 2022. However, if for whatever reason you can’t or your employer should but for some reason doesn’t currently qualify for Public Service loan forgiveness, you do have options to keep the door open.

By the way, since we’ve mentioned the Help Tool multiple times, I’m going to go ahead and leave a link to it right here – Public Service Loan Forgiveness Help Tool.

What is Public Service Loan Forgiveness?

Okay – we’ve gotten that time sensitive information out in the open. Now I’d like to take a step back, slow down and go over some basic information that might help some who aren’t sure exactly it is that we’re talking about.

Though you may have heard the term thrown around before, it’s entirely possible you aren’t quite sure what public student loan forgiveness (PSLF) is. By extension, you may be unsure whether you personally qualify for this forgiveness or not.

Speaking in general terms, the public service loan forgiveness program is intended to incentivize and reward those who take career paths in a sector that benefits public wellbeing. Those eligible for public service loan forgiveness include those who work in local, state, or federal government as well as those who work for non-profit organizations. Those who qualify, apply, and are approved are eligible to have the remaining balance of their Direct student loans forgiven by the federal government. To qualify for this program, you must have made 120 (ten years) of qualifying, on-time, and full monthly payments while working for an eligible employer.

This all seems straight forward enough. However, there are oodles of people who believe that they’re eligible and working towards public service loan forgiveness only to have the rug pulled out from underneath them because of a disqualifying event (like a payment being deemed late). More unfortunately, there seem to be many who don’t realize that their streak of payments has been disallowed until they apply and are denied for forgiveness.

The black and white nature of these rules are something that the current presidential administration seems to be interested in changing. However, this temporary measure has been made to get as many people as possible who should’ve qualified in the first place through the gates and approved.

Qualifying for Public Service Loan Forgiveness

Like we said before, those who work for government, non-profits, or eligible employers qualify for public service loan forgiveness. That seemingly includes a ton of people. Unfortunately, that description is also too vague for many who may be in a gray area.

So, to be a bit more specific we’re going to pull some information from (drumroll)… YOU GUESSED IT, the Federal Student Aid website!

“Qualifying employment for the PSLF Program isn’t about the specific job that you do for your employer. Instead, it’s about who your employer is. Employment with the following types of organizations qualifies for PSLF:

• Government organizations at any level (U.S. federal, state, local, or tribal) – this includes the U.S. military
• Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code

Serving as a full-time AmeriCorps or Peace Corps volunteer also counts as qualifying employment for the PSLF Program. Use our employer search tool to help determine if your employer qualifies for PSLF.

The following types of employers don't qualify for PSLF:

• Labor unions
• Partisan political organizations
• For-profit organizations, including for-profit government contractors”

I hate to quote so much information from a source – however, this is an extraordinarily important excerpt that’s coming DIRECTLY from the primary source of information. To recap – working full time for the local, state, federal, or a tribal government qualifies you. As does working for a 501(c)(3) non-profit organization, or for Ameri Corps or Peace Corps. The employer search tool is also a robust way to determine your employer’s eligibility.

Okay, What EXACTLY are the Temporary Changes?

Okay, we swung through the pertinent and time-sensitive information so fast that a lot got left out in terms of specifics of the temporary waivers. So, now we’re going to take a look at what the temporary requirements are as opposed to what they NORMALLY are.

For starters, with the temporary limited waiver, you may receive credit for periods of repayment on direct loans, FFEL loans, or Perkins loans. This is different from the usual requirement where you only receive credit for repayments on Direct student loans. If you’re interested in learning more about the different types of student loans, check this out!

The next difference is that repayments count under any repayment plan. This is different from the usual requirement that repayments only qualified if they were either under the ten-year standard repayment plan or income driven repayment plan. Payments will also temporarily count if they came before a consolidation, or if they were late or less than the amount you were supposed to pay (even if it was before consolidation).

Lastly, you may receive forgiveness even if you’re no longer with the employer who qualified you for public service loan forgiveness. Typically, you must be employed at your qualifying employer at the time you complete and submit the application for public service loan forgiveness. However, temporarily you may submit and qualify even if you’re no longer at the job.

All in all, these temporary measures are going to shift the tide drastically for some who may have given up hope of having the remainder of their student loans forgiven. There are some serious temporary exceptions being offered – and I’d HIGHLY recommend checking your eligibility because chances like this are RARE.

One thing to note that hasn’t changed is that any loans must have been taken AFTER October 1^st, 2007 to qualify – when public service loan forgiveness was created.

How to Apply for the Limited Waiver if You Qualify

In order to take advantage of the limited waiver, you must submit a public service loan forgiveness application. This makes it sound incredibly simple; however, the process of completing and submitting an application can be somewhat intimidating.

Before you start, you’ll need to:

• Check to see if your employer is eligible for public service loan forgiveness (review the requirements above)
  1. Note: Don’t completely give up if your employer isn’t currently qualifying. Remember what we talked about above – if you believe your employer should qualify, but currently doesn’t you should submit an application, as it may be reviewed and approved in the future.
• Get your most recent W-2 form from your employer OR get your employers Federal Employer Identification Number (EIN).
• Have about thirty minutes to an hour to complete the process.

First, you’ll want to navigate to the student aid website, and find the PSLF tool to begin applying. The Student aid website has consolidated the process into a single form, which can be found here.

Why PSLF May Have Been Denied Previously and Why That May Not be the Case This Time?

This is all a part of the current presidential administration’s plan to make student loans more manageable to borrowers. You may recall seeing in the news that the Biden administration announced a three-headed approach to tackling federal student debt for borrowers:

• The elimination of up to $10,000 in Federal Student Loans for borrowers making less than $125,000 annually.
• Make repayment of student loans more manageable by introducing new income-driven repayment plans and cutting monthly payments to 5% of monthly income.
• “To fix the broken student loan forgiveness”

The measures being taken with this temporary waiver are of course, under the third bullet point on this plan. It has also been stated that this limited waiver is only one step in a more overarching plan to tackle the broken system of public service loan forgiveness.

Your forgiveness could have been denied because of your employer, because of a non-full payment, late payment, or skipped payment. Unfortunately – these things aren’t always within our control. The black and white nature of the Public Service Loan Forgiveness program as it stands disqualify so many people because of an incident that could’ve happened just once or twice. The introduction of this temporary waiver to PSLF stands to temporarily fix that issue.

Why You Should Consider Applying for the Limited Waiver, Even if Your Employer Isn’t Eligible.

The fact of the matter is that chances like this don’t come by often. While the president and his administration say that there are plans to permanently fix the system, who know when or if that will come to pass? Also, what do you think the chances of the Public Service Loan Forgiveness program becoming a political soccer ball are? We all hope it wouldn’t, but you never know.

I’m not advocating for everyone to rush to apply for the program, especially if they’re obviously not going to qualify. However, if you fit into a gray area, or if you believe that there’s a chance that your employer could qualify in the future for PSLF, you should apply. Make hay while the sun’s still shining and don’t possibly miss out on a once in a lifetime opportunity.

If you're interested in discussing student loan forgiveness options, please call or email to schedule an appointment with me. We can create a financial plan that can that budgets and tackles student debt!

 Until next time...this is Melissa Making Cents!

Melissa Anne Cox, CERTIFIED FINANCIAL PLANNER™, is a College Planning and Student Loan Advisor and Financial Coach in Dallas, Texas.