Upcoming Changes In the Public Service Loan Forgiveness Program

Shefali Lohia
October 30th, 2021 | 5 mins

The world of student loans continues to explode in new, interesting, and potentially hugely positive ways during the Coronavirus pandemic. This month, the Education Department announced changes to the Public Service Loan Forgiveness Program that could help hundreds of thousands qualify for student loan debt relief much sooner than they had ever hoped. Here is a breakdown of what's been announced, what the changes mean, and what the impact could be.

What is the Public Service Loan Forgiveness Program?

It's a government program that was established under the College Cost Reduction and Access Act of 2007 with the purpose of giving support to professionals who work full-time in public service and have federal student loans.

Originally, the Public Service Loan Forgiveness Program forgave the remaining balance on your Direct loans after you met certain requirements.

Until now, borrowers had to meet four requirements to qualify:

  • Working in a public-sector job.
  • Making 120 on-time student loan debt payments.
  • Participating in a qualified repayment plan.
  • Having a specific type of loan, known as federal Direct loans.

According to changes announced on October 6, 2021, borrowers will now get a time-limited waiver, relaxing several of these rules retroactively which will lead to student loan debt relief for many more.

What are the major changes to the Public Service Loan Forgiveness Program?

  • Borrowers who had or have Federal Family Education loans and Perkins loans will now have the opportunity to qualify for student loan debt relief. And some of their past payments will count towards the 120 requirement.
  • Several types of payments that previously didn't count towards the required 120 will now, including some types of partial payments and payments made in an extended repayment plan.
  • Credit will be restored to otherwise eligible people who made late payments.
  • There will be extra support for military service members.

What do these changes mean?

  • It is estimated that 22,000 borrowers would be immediately eligible to have their loans erased automatically.
  • Another 27,000 borrowers could see their debts likewise disappear as long as they can prove they were working in public service during the time they made their retroactively-eligible payments.
  • As a comparison, only about 16,000 borrowers have had loans forgiven through the Public Service Loan Forgiveness Program to date since the program was created.

This is what the Department of Education had to say about the spirit of the program: “The Public Service Loan Forgiveness (PSLF) Program is an important—but largely unmet—promise to provide debt relief to support the teachers, nurses, firefighters, and others serving their communities through hard work that is essential to our country’s success… the Department of Education is announcing a set of actions that, over the coming months, will restore the promise of PSLF.”

Who's eligible for loan forgiveness?

  • Borrowers with F.F.E.L. loans, Perkins loans, and Direct loans (which were already eligible).
  • Borrowers who borrowed for their own education.

Head to StudentAid.gov/PSLFWaiver to find out if you can benefit from these changes.

Please note, if you're eligible, you must apply for the Public Service Loan Forgiveness program before October 31, 2022 if you haven't yet.

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