Biden Student Loan Forgiveness: The Biden administration announced a week ago that it will make significant modifications to Public Service Loan Forgiveness (PSLF).
A federal student loan forgiveness programme with difficult eligibility criteria and poor acceptance rates.
The Department of Education will temporarily loosen the initial qualifying criteria that limited PSLF to only certain types of federal student loans and specific repayment plans under its new “Limited PSLF Waiver” programme, which will be accessible through October 31, 2022.
Biden Student Loan Forgiveness (PSLF)
Over half a million student loan borrowers are expected to advance two or more years closer to loan forgiveness by expanding eligibility to include more federal student loans — including FFEL-program loans — and any repayment plan, with thousands potentially becoming eligible for complete loan forgiveness within the next year.
Even if it excludes some borrowers from PSLF, the changes are significant. The Limited PSLF Waiver, on the other hand, provides a number of unique benefits that aren’t well known. Here’s a quick rundown.
Some borrowers may be eligible for refunds following PSLF student loan forgiveness
To be eligible for student loan forgiveness under the PSLF programme, you must make 120 qualifying payments. With the new programme amendments drastically extending the definition of a “qualified payment,”
More people are projected to hit the 120-payment level soon. And other borrowers will swing from being well short of 120 qualifying payments to exceeding 120 qualifying payments as a result of the PSLF modifications.
Borrowers who have made more than 120 qualifying payments to PSLF may be eligible for a reimbursement of their excess payments.
“If you made more than 120 payments on an existing Direct Loan, you will automatically get a refund for the qualifying payments you made in excess of 120,” according to the Department of Education.
However, the Department has not stated if all 120-plus payments must have been completed on an existing Direct loan (although the Department’s first language suggests “yes”).
For example, a borrower who has made less than 120 Direct loan payments but can now include in earlier FFEL loan instalments may have made more than 120 total payments. In the following weeks or months, the Department of Education should release more instructions.
When receiving student loan forgiveness through
The new PSLF changes, some borrowers may not need to be working in qualifying employment.
Previously, the PSLF programme required borrowers to continue working in qualifying public sector employment after making 120 qualifying payments while their PSLF application was being evaluated.
It’s possible that this process will take months. However, the borrower was not allowed to leave his or her qualifying job until his or her PSLF application was approved and forgiveness was granted.
That condition has been removed from the Department’s new Limited PSLF Waiver for the term of the waiver programme (to October 31, 2022).
Borrowers must have been in qualifying employment when they completed all 120 payments, but they do not have to continue working in eligible employment when they receive loan forgiveness if they apply before October 31, 2022.
Although you must be employed at a qualifying company when you earn forgiveness under normal PSLF Program standards,” the Department says, “that criterion is waived for this limited-time opportunity.”
Under the PSLF, some deferment periods will now be counted toward loan forgiveness.
Deferment and forbearance periods, in which no payments are required, did not previously count towards PSLF. A borrower had to be in repayment under a specific income-based repayment plan under the original PSLF requirements.
For active-duty military service personnel, this will alter under the Limited PSLF Waiver. “Months spent on active duty will count toward PSLF,” the Department adds, “even if the service member’s loans were on deferment or forbearance rather than in active repayment.”
PSLF may now accept partial payments.
Under the original PSLF criteria, a payment had to be made in whole and on time to be considered a “qualified payment.”
However, under the Limited PSLF Waiver, this regulation will be waived. “Under the new criteria, any earlier payment made will count as a qualifying payment.
Regardless of whether the payment was completed in whole or on time,” according to the Department of Education. All you need is a job that qualifies.”
The Department has yet to release any additional information. Would the Department, for example, count both a $99 and a $2 payment if a monthly payment was $100?
The Department’s first guidance indicates that the answer is “yes,” but more information should be available in the coming months.
Takeaways for Borrowers of Student Loans
Borrowers should be informed that the significant revisions to the PSLF programme are a one-year-only offer, valid only until October 31, 2022.
Borrowers may need to take additional measures to take advantage of the enlarged program’s benefits. More information is available here.
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