The Education Department Announces More Tweaks to Public Service Loan Forgiveness

The Education Department on Wednesday announced additional measures to make the Public Service Loan Forgiveness program more accessible to applicants when a set of a temporary reforms ends on Oct. 31.

The popular, yet sometimes frustrating, program offers college graduates the chance to have their student loan debt forgiven if they spend 10 years working for government or a qualifying nonprofit organization and make regular loan payments over that period of time. Prior to last October, when the department announced a series of temporary changes to make forgiveness easier to access, participants described headaches navigating the program due to stringent rules governing loan payments and inconsistent information from the government, contractors and lenders.

Those temporary fixes are going away after Oct. 31, as the department prepares to implement new regulations that would reform the program on a permanent basis next July. Despite calls from more than 100 lawmakers earlier this fall to extend the temporary waivers until the new rules can take effect, the department appears set to let these changes expire at the end of the month.

But officials announced Wednesday that another form of relief will be coming to borrowers seeking forgiveness through the program during the downtime. The department will automatically correct a series of “historic inaccuracies” in how payments under income-driven repayment plans counted toward forgiveness, as well as instances where loan servicers improperly put borrowers into forbearance.

“As a result of these past failures, borrowers who were in repayment for 20 or 25 years or longer are unable to receive forgiveness under [income-driven repayment], and borrowers who were in repayment for 10 years or longer while working in public service may not receive [loan forgiveness],” the department wrote in a fact sheet announcing the initiative.

As part of this fix, the department will award borrowers credit toward the Public Service Loan Forgiveness program for any month in which they were in a repayment status, regardless of the loan type or the repayment plan and whether they were partial or late; any month in which loans were in an eligible repayment, deferment or forbearance status prior to consolidation; periods when borrowers spent at least 12 months consecutively in forbearance or 36 cumulative months in forbearance; and any month spent in deferment aside from in-school deferment prior to 2013.

These adjustments are available only to borrowers who have Direct Loans or Federal Family Education loans managed by the department. Borrowers who have not yet consolidated their loans must apply to do so by May 1, 2023. The actual adjustments are slated to be reflected in applicants’ accounts by next July.

The initiative will be available both to those who have applied for loan forgiveness under the temporary waiver program as well as those who miss the deadline, although the department is strongly urging applicants to submit their forms prior to Oct. 31, noting that officials will continue to process claims submitted in time after the deadline passes.

“A borrower who has never applied for PSLF and submits a PSLF form after Oct. 31, 2022, will have their PSLF form assessed under normal PSLF rules,” the department wrote. “However, they may receive additional credit toward PSLF for any periods of certified employment when the one-time account adjustment occurs in July. At that point, borrowers who reach 120 qualifying payments may need to provide additional certification that they remain employed by a qualifying employer.”