The Big Changes to Public Service Loan Forgiveness, Explained

Changes that the Education Department is making to the Public Service Loan Forgiveness Program should help hundreds of thousands qualify for relief much sooner than they had ever hoped — if the alterations work as intended.

The changes, announced Wednesday, represent a dramatic expansion of a program that can save public servants — including teachers, nurses, government workers and employees of nonprofits — enormous sums. It’s also largely temporary, since there’s an expiration date of Oct. 31, 2022, for putting most of the waivers in motion.

The P.S.L.F. program has been plagued by problems almost since it started in 2007. Untold numbers of applicants have met with bitter disappointment after misunderstanding the requirements or receiving incorrect information from their student loan servicers when they asked for help. Some dutifully sent off 10 years of monthly payments thinking this would qualify them for forgiveness later, only to find out they didn’t qualify because they had the wrong kind of loan or repayment plan.

Every twist and turn in the P.S.L.F. saga often leads to more questions, and this one is no different. Here are some that I’ve been able to answer so far, and we’ll add to the list in the coming days.

What exactly is the Public Service Loan Forgiveness Program?

The program allows a variety of government and nonprofit workers with federal student loan debt to have remaining balances forgiven, tax-free. This population numbers in the tens of millions — federal, state and municipal workers; educators; charity workers; everyone on the payroll of a nonprofit hospital and more.

But qualifying is complicated. It requires borrowers to clear four hurdles. You need that full-time, qualifying job. You have to have the correct type of loan. Only certain federal repayment plans merit forgiveness for the debtors. And you need 120 on-time payments on the permanent record that your loan servicer keeps; they don’t need to be consecutive.

What are the big changes?

The Education Department made significant changes to three of the four hurdles.

First, there are the loan types. People who once had or still have formerly ineligible, so-called F.F.E.L. loans (Federal Family Education Loans) will have an opportunity to qualify for forgiveness — and have certain past payments count toward the magic number of 120. They’ll have to take a series of steps that I outline below by Oct. 31, 2022, to begin the process.

This is a major change: It could open the door to hundreds of thousands of borrowers working in public service jobs who made payments on those loans for years without realizing they didn’t count toward forgiveness.

The second adjustment comes in the repayment plan arena. A variety of payments from the past that did not count toward 120 will now count after all. Partial payments, and those that you made in an extended repayment plan, will get retroactive credit. This addresses another longstanding problem for borrowers who were given bad information about their payment plan’s eligibility.

Finally, the Education Department will restore credit for otherwise eligible people who made late payments.

Who is eligible for public service loan forgiveness, and how do I tell if I qualify now?

If you don’t know what type of loan you have, start there.

People who have or had those F.F.E.L. loans are arguably the biggest beneficiaries of the temporary changes. About 60 percent of people who have certified that their employment was eligible are in this category, the Education Department said.

First, you’ll need an account at studentaid.gov, the site of the Federal Student Aid office, if you don’t have one already. There, the Education Department calls this an FSA ID. Once you have that and are signed in, go to the “My Aid” page and look for the list of your loans. It should contain both current loans and any others that you have repaid or consolidated into new loans.

Any F.F.E.L. ones should begin with those initials. You might have Perkins Loans, which are also eligible for forgiveness. And you may see loans that begin with the word “Direct.” Direct loans were already eligible for P.S.L.F.

But what you have to do next will depend on the kind of loan you have and the kind of waiver you’re seeking.

OK, I have an F.F.E.L. loan and that’s it. Do I consolidate?

Yes, but if you don’t have absolute certainty that a current or former employer is eligible, check that first. The Education Department’s website has tools and an employer database you can consult.

Then, submit what the department refers to as a “consolidation application.” This will allow your old loan to become a new one of the right type, in a way that wasn’t possible without the current waiver.

The next step is to submit what is, in effect, your first application for the public service program generally. The department encourages people to do so via a form that you can get online through its P.S.L.F. help tool.

At that point, it should record any payments you’ve already made on the old F.F.E.L. loan in order to credit you toward forgiveness under the new waiver — if you meet the other eligibility requirements.

You need to take these steps by Oct. 31, 2022.

I already consolidated a F.F.E.L., and that reset my payment count to zero. Can I now get credit for my old payments?

Yes. And good news: The initial review of your situation is supposed to happen automatically.

Let’s begin with the presumption that upon consolidation, you submitted at least one employment certification form to confirm that your job is eligible. In that case, according to a department official, it should now have records of that action and of prior payments to the servicer that administered your loan before consolidation.

If the department has those records, you are supposed to get an update in the coming months from the department telling you the number of pre-consolidation payments that are now going to count.

Here’s one big potential hiccup: You might not have submitted employer certification forms for previous jobs back when you didn’t think you were eligible for forgiveness because of the type of loan you had at the time.

If that describes you, go ahead and submit the forms before you get an update from the department, according to a department official. Then, save that form (and every form always — this is a recurring theme with the program, alas) in case the system keeps hiccuping.

I have an F.F.E.L. Parent PLUS loan, and I’m a public servant. Can I apply for these waivers?

No. The temporary changes apply only to people who borrowed for their own education — not for a child or grandchild. If you borrowed via the PLUS program for graduate school, however, the new waivers apply.

I have the right kind of loan, but I’ve been tripped up in the past by payments not counting. What changes now?

There is more good news here. The department intends to look at your payment history and credit people for many that had not counted before. It will do this for payments that people make through the end of this month.

First, it’s waiving its restrictions on the type of repayment plans that were eligible. For instance, the payments people made through so-called extended repayment plans should be eligible now if they were working for a qualifying employer at the time. Extended repayment plans stretch the repayment term up to 25 years, but they are different from the so-called income-driven repayment plans that were (and are still) eligible for the P.S.L.F. program.

What if I didn’t make full payments on time?

There’s a waiver here, too. The department is waiving the requirement that people were supposed to have made payments in full and on time in order to get credit toward that all-important 120-month figure.

This will help not just people who paid late but people who paid too much or too little (either by accident or to try to get ahead on repayment a bit), which has been a particular scourge of the program.

These waivers are also temporary. Some adjustments may end up being automatic here, too, say for people who have already consolidated loans and certified some of their employment. Other borrowers will need to submit a form by that same October date next year to trigger a review of past payments.

Is anything about employer eligibility or the 120 payment count changing?

No, though the Education Department will be looking back to see if its servicer made any errors in rejecting employer certification forms. There may be new rules in a year or two that expand eligibility as well.

I’m in the military and didn’t make payments while on active duty. Has anything changed?

Yes — more good news here. Servicers sometimes told members of the military to defer their loans or put them in forbearance if they were worried about making payments on time (or at all) during a deployment. But that meant missing credit toward the 120 payment figure that yields the tax-free debt forgiveness.

Now, the Education Department plans to look back at these accounts and issue credit where appropriate for the time active members of the military were in deferment or forbearance. It will do this going forward as well.

I don’t work for a qualifying employer anymore, but I did make 120 payments toward a then-ineligible loan when I did. Am I eligible for a waiver now?

Yes, if you meet the other requirements. Normally, you need to work for an eligible employer while you’re making the formal request for forgiveness after 120 payments, but that is not necessary under the current waiver.

How can I keep updated on what’s happening with my account?

Check your FSA account to make sure the Education Department knows where to find you.

Open all your postal mail and email and check spam folders from time to time, too. One missed message could cause weeks or months of problems. And keep an eye on the department’s website, where it discusses these waivers.

And any time there is a new benefit or waiver like these, you can be sure that bad actors are going to come along to try to charge people to access it. Don’t fall for phishing email or enticing ads online.

How long should I wait to hear about an automated review before taking some kind of action myself?

For now, the Education Department is offering reassuring words about its ability to fix many things on its own in the next “several” months.

This is cold comfort, however, if you’ve made payments for 14 years working as a teacher and feel you should have been done four years ago. Having hundreds of dollars of your monthly budget back, after all, represents an enormous life change — and could mean finally being able to save for your own kids’ education.

If you haven’t heard from the department by February or seen updates on the statements and records that FedLoan, the entity that services people who are already enrolled in P.S.L.F., provides, call or send a message to FedLoan for guidance. If that doesn’t yield any information, send a note to the department’s ombudsman office and request a review. And if that doesn’t work, contact your senators’ or congressperson’s constituent service representatives and ask them to intervene on your behalf.

And if you have had the right type of loan all along but are hoping for a payment review, you should fill out the standard P.S.L.F. form if you haven’t done so yet or haven’t certified your employment before because you didn’t think you needed to.

What if I end up with credit for more than 120 payments when this is all over?

You should get a refund, automatically, according to the department’s website, as long as you haven’t already received full forgiveness (say, a year or two ago). If you already have, there won’t be any refund forthcoming even if the current waivers mean that you, in theory, made too many payments before your forgiveness.

Where can I get help in the meantime?

The P.S.L.F. journey has proved lonely and infuriating for so many people. Many of them commiserate on Facebook in a Public Service Loan Forgiveness program support group, where you can learn about others’ successes, failures and tactics. The Reddit group about the program can offer similar camaraderie. Both places should have frequent updates from individuals posting about what they’ve heard from which entities about their progress or lack thereof.

The Student Loan Borrower Protection Center offers resources for borrowers, and the Institute of Student Loan Advisors tries to answer debtor questions. Many financial planners now specialize in student loan advice, too.

How could this all go awry before the Oct. 31, 2022, deadline?

Where to start, really?

Given all the past problems, it is a bit of a stretch to think that the Education Department will be able to quickly sort data on hundreds of thousands of people or more and pick out the ones who are eligible for waivers. But at least it is trying.

Meanwhile, FedLoan has announced its intention to get out of the business of servicing these loans altogether. The Education Department did not say what entity might replace it or when.

There’s lots of potential for chaos when moving millions of people to a new loan servicer in the middle of this waiver period, if that ends up happening. And to make matters messier, borrowers are supposed to start repaying their student debts again early next year, once a pandemic relief provision expires.

So keep every form and message related to your loans. Scan, save and also print any loan records you can get your hands on, and do it now.

And most of all, cross your fingers.