Student loan forgiveness has certainly had no shortage of attention in the news given the pandemic and several legislative proposals. But what we know to date is that the Department of Education has issued the Public Service Loan Forgiveness Limited Waiver Opportunity, effective October 6, 2021.
What does waiver this mean and for whom? For starters during this limited time, borrowers may receive credit for past payments made on non-Federal Direct loans that would not have previously qualified for payments made credits towards the PSLF program. The most common example of a non-Federal Direct loan is the FFEL loan. Borrowers who are currently repaying a FFEL loan may want to take a closer look at what this new waiver offers.
FFEL was a program originated under the Higher Education Act of 1965 that worked with private lenders to originate and service education loans guaranteed by the federal government. This program was terminated in 2010.
The replacement for FFEL is the William D. Ford Federal Direct Loan (Direct Loan) Program which is a federal student loan program for eligible students and parents to borrow directly from the U.S. Department of Education at participating schools.
Note: Parent PLUS loans are not eligible under the limited PSLF Waiver.
How does the waiver help FFEL borrowers?
|PSLF Previously||PSLF Limited Waiver||Notes|
|FFEL Eligibility||FFEL loans must be converted to a Federal Consolidated Loan to qualify for PSFL||FFEL loans must be converted to a Federal Consolidated Loan to qualify for PSFL||No change|
|Payment Credits||Any payments made prior to consolidation of FFEL loans DID NOT carry over to 120 On-Time Payment requirement||Any previous FFEL payments made are NOW applied to the 120 on-time payment requirement||Payments credit waiver expires on 10/31/2022 for FFEL loan conversions to federal consolidation loans|
|Repayment Plan Type||Must have been on and IDR Income-Driven Repayment Plan||All repayment payment plans now eligible||Non-IDR repayment plans waiver expires on 10/31/2022|
|Qualified Employment||Employed by government, 501(c)(3) or other not-for-profit organizations that provides a qualified service||Employed by government, 501(c)(3) or other not-for-profit organizations that provides a qualified service||No change|
|Employment Status||Full-time||Full-time||No change|
A Direct Consolidation Loan allows you to consolidate (combine) multiple federal education loans into one loan therefore providing you with a single monthly payment. A Direct Consolidation Loan has a fixed interest rate for the life of the loan. The fixed rate is the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest one-eighth of one percent. To Apply for a Direct Consolidation Loan, you can complete and submit the application online, or you can download and print a paper application for submission by U.S. mail. More details regarding Federal Loan Consolidation can be found at: https://studentaid.gov/manage-loans/consolidation.
Below are some additional resource links for more details on PSLF:
Public Service Loan Forgiveness Program
Public Services Loan Forgiveness Help Tool
Limited PSLF Waiver Information
Public Service Loan Forgiveness Program FAQ