Student Loan Forgiveness: This great program only has weeks to go

Teachers, government employees and people employed by nonprofit organizations have just days left to apply for a one-time exemption that could help them erase or reduce their student debt.

The so-called “limited public service loan forgiveness waiver” was designed by the Biden administration last year to fix a major problem with a long-term program designed to reduce public employees’ college debt. Under the waiver, public sector employees can apply to receive credit for past repayments who have not previously opted for loan relief.

The deadline to apply for an exemption is October 31 — meaning civil servants have just three weeks left to secure the relief.

of President Biden student loan relief effortwhich would erase up to $20,000 in student debt for qualified borrowers, has received significant attention, but little attention has been paid to the administration’s efforts to help public employees with their college debt.

The Public Service Loan Forgiveness Program was created in 2007 with a noble goal: To forgive the student debt of Americans who have worked in public service positions – as teachers, civil servants or in nonprofit organizations – for at least 10 years. But the program became notorious for its byzantine regulations, as well as misleading instructions from some loan servicers that hindered the ability of many public employees to get relief.

MoneyWatch: Debt Erasure and Inflation


For example, a 2018 report by the Government Accountability Office, a government watchdog, found that while 1 million people had applied for the program, only 55 people at the time had actually received debt relief.

One reason for the dismal results: People who had consolidated their student loans learned that their payments didn’t count toward the program, so they were out of luck.

What does resignation do?

The waiver reverses some of the restrictions on the types of loans and payments that qualify for the program.

The Department of Education says that “any previous repayment period will count as an eligible payment, regardless of the loan program, repayment plan, or whether you made the payment in full or on time.”

For example, people who consolidated their loans will now be able to calculate their payments in the program. The Biden administration estimates this will help 550,000 workers who were previously ineligible due to loan consolidation.

Previously, some loan payments were canceled if they were even a penny or paid a day or two late, the Department of Education said last year. Opting out means these payments will now count towards the plan.

However, there is one important type of loan that does not qualify for the waiver: Parent PLUS loans. These are loans that parents of students take out to pay the costs of their children’s education. Only student loans qualify for the waiver.

How many people have qualified for the waiver so far?

Nearly 190,000 public employees have had their student loans forgiven through the waiver, according to lawmakers citing government data.

Many more borrowers could qualify for the program but may not be aware of the waiver.

How do I know if I qualify?

The Department of Education has a website where you can learn about program requirements, which remain complex.

One major limitation is that you must have worked for an eligible employer, such as a public school or government agency, to receive waiver approval. Only payments made while you worked for a qualified employer will count.

For example, if you worked as a public school teacher for a year but then transferred to a for-profit school, only the repayments you made while working at the public school will count toward loan forgiveness.

What will happen after October 31st?

Beginning November 1, 2022, the Department of Education will revert to normal program requirements for both the Public Service Loan Forgiveness Program and the Temporary Expanded Public Service Loan Program.

The latter was created in 2018 to help people who mistakenly enrolled in the wrong repayment plan and therefore did not qualify for the Public Service Loan Forgiveness program.

Could the waiver be extended?

The Department of Education says the waiver will only be available until Oct. 31, but a group of lawmakers is asking the administration for more time.

On Thursday, dozens of lawmakers asked U.S. Education Secretary Miguel Cardona to extend the waiver until July 1, 2023.

In an Oct. 6 letter to Cardona, lawmakers, including House Majority Leader Chuck Schumer, a New York Democrat. and Sen. Elizabeth Warren, D-Mass., called for more time, noting that data “indicates that only a fraction of PSLF-eligible public employees have used the waiver.”

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