Most Benefits of PSLF Waiver, Set to Expire on Halloween, Extended for Millions of Workers through Planned Overhaul of Income-Driven Repayment
October 20, 2022 | WASHINGTON, D.C. — The Student Borrower Protection Center (SBPC) released the following statement commending President Biden, Education Secretary Miguel Cardona, and the U.S. Department of Education (ED) for extending most benefits of the Administration’s successful effort to deliver student debt relief to public service workers, known as the Public Service Loan Forgiveness Limited Waiver (PSLF Waiver).
The Administration announced that under a previously publicized effort to overhaul a different part of the student loan safety net, the scandal-plagued Income-Driven Repayment (IDR) scheme, it has extended most of the benefits and protections that brought millions of public service workers closer toward or fully through to cancellation over the past twelve months. ED also finalized its planned overhaul of the rules for the original PSLF program, which are set to take effect in July 2023.
SBPC’s executive director Mike Pierce said:
“President Biden came into office with a clear mandate: deliver a generation of public service workers the student debt relief they were promised under the law. For the first time, the Education Department has lived up to this promise–cancelling debts for more than 200,000 public service workers and helping more than 2 million make progress toward relief.
Today, millions of public service workers who were unable to use the PSLF Waiver before the Administration’s Halloween deadline will thankfully get another chance at debt relief. We are glad to see that the Biden Administration agrees with public service workers and their advocates that you can’t have too much of a good thing.
However, by arbitrarily excluding Parent PLUS loans and by failing to extend the benefits of these protections to those in default, millions of older borrowers and financially distressed borrowers will remain left out.”
About the Income-Driven Repayment Account Adjustment
Under the law, borrowers are entitled to a range of IDR plans that set their monthly payment as an affordable percent of their income and offer cancellation after 20 to 25 years of repayment. However, a well-documented history shows that student loan servicers regularly steer borrowers away from these plans and have widely failed to track borrowers’ progress toward promised cancellation.
In April 2022, the U.S. Department of Education announced a one-time “account adjustment” meant to address these historical breakdowns. For public service workers with student debt, this initiative mirrors the same benefits and protections that have delivered debt relief to public service workers across the country. These benefits include credit toward both PSLF and debt cancellation under IDR in the following circumstances:
- A pathway to debt cancellation via consolidation for borrowers with older federally guaranteed student loans, also known as Federal Family Education Loan Program loans or FFELP loans.
- Credit toward debt cancellation for any monthly payments made, regardless of what payment plan was selected and regardless of whether they were made on time, in advance, or late.
- Credit toward debt cancellation for any member of the military for any period of active duty military service, including during periods of forbearance or deferment.
In addition to providing borrowers working in public service with the same opportunity to gain credit toward PSLF, the IDR Account Adjustment also offers all borrowers, including public service workers, an additional set of protections:
- Credit toward debt cancellation for extended periods of forbearance and certain deferments.
- Credit toward debt cancellation for any borrowers who were “steered” into forbearance due to misrepresentations by a student loan company.
More information on how to qualify for the IDR Account Adjustment is available here: https://studentaid.gov/announcements-events/idr-account-adjustment
About the Public Service Loan Forgiveness Limited Waiver
Congress created PSLF in 2007 to provide public service workers with student loan debt relief in exchange for a decade of service in their communities. However, as countless borrower stories and investigations illustrate, the promise of PSLF—just like that of IDR—proved not to be the reality for millions of public service workers. Instead, bad industry practices and ambivalence by ED led PSLF to have a 98 percent rejection rate—and the expansion meant to fix PSLF having a 97 percent denial rate. Underlying these statistics, millions of teachers, nurses, and servicemembers who planned their lives around the promise of eventual loan forgiveness were cheated out of their rights over the decade after the program’s enactment.
To address these long-standing breakdowns, ED announced in October 2021 that it would use authority under the HEROES Act of 2003 to temporarily waive certain of the regular PSLF program requirements. Under this initiative, referred to as the “PSLF Limited Waiver,” borrowers would receive credit toward loan cancellation under PSFL no matter what type of loan they had or regardless of whether they had been enrolled in the specific repayment plans generally required for PSLF.
The PSLF Limited Waiver has been extremely successful, securing $12 billion in debt cancellation for more than 192,000 public service workers. This success accounts for the overwhelming share of the more than $13 billion in relief that more than 201,000 public service workers have accessed under PSLF, TEPSLF, and the PSLF Limited Waiver overall. Moreover, SBPC has noted that the waiver has sparked a huge increase in engagement with PSLF generally, helping to set the program up for long-term success.
However, much work remains to be done to fully restore the promise of PSLF. SBPC estimates show that as many as nine million public service workers with student loan debt could be eligible for PSLF, but that only roughly 15 percent of these eligible borrowers have filed paperwork to enter the PSLF pipeline.
This limited PSLF Waiver is set to expire after October 31, 2022, just one year after the initial announcement, by which point borrowers must take affirmative steps to benefit from the relaxed rules and claim credit toward PSLF.
About Student Borrower Protection Center
The Student Borrower Protection Center (SBPC) is a nonprofit organization focused on alleviating the burden of student debt for millions of Americans. The SBPC engages in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance economic opportunity for the next generation of students.