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Income-Driven Repayment Plans (IDR) and Limited Public Service Loan Forgiveness (PSLF) Waivers for FFELP Loans

Limited PSLF Waiver

On Oct. 6, 2021, the U.S. Department of Education (ED) announced a set of changes to the Public Service Loan Forgiveness (PSLF) Program which will be implemented in phases over the next year. These changes to the program are intended to help PSLF reach a broader audience of qualified borrowers. Some changes are time-limited and will require you to act soon.

The opportunity to use this limited PSLF waiver exists from October 6, 2021, through October 31, 2022. More information and updates can be found at StudentAid.gov/pslfwaiver.

You should also know:

  • Your Federal Family Education Loan Program (FFELP) Loans do not currently qualify for PSLF or Temporary Expanded Public Service Loan Forgiveness (TEPSLF). However, you can take advantage of the benefits offered under the limited PSLF waiver if you receive or apply for a Direct Consolidation Loan on or before October 31, 2022.
  • The ways you can receive credit towards PSLF and TEPSLF include but are not limited to:
    • Past periods of repayment. The limited PSLF waiver will still count you as “In Repayment” even if your payments were not made:
      • For the full amount due
      • On a qualifying repayment plan
      • On-time
    • Eligible periods of service under the Teacher Loan Forgiveness program
    • Eligible military deferment and forbearance periods
    • In a COVID-19 administrative forbearance
    • In a forbearance status (excluding COVID-19) for 12 or more consecutive months
    • In a forbearance status (excluding COVID-19) for 36 or more cumulative months
    • In a deferment status (excluding In-School Deferment) before January 1, 2013
    • In an Economic Hardship Deferment status on or after January 1, 2013
    • Periods of default and In-School Deferment, still do not qualify
  • Regardless of the limited PSLF waiver, you must consolidate your loans into the Direct Consolidation Loan program in order to qualify for PSLF or TEPSLF. Normally, prior periods of repayment would not qualify for credit toward PSLF or TEPSLF. However, the limited PSLF waiver allows for a waiver of certain program requirements. For any non-Direct Loan to be forgiven under the limited PSLF waiver, it must be consolidated into a Direct Loan. The deadline to apply for this consolidation is October 31, 2022. You cannot receive credit for payments made under the limited PSLF waiver if you apply to consolidate after this date.
  • To understand whether you may already have qualifying payments for PSLF or TEPSLF under the limited PSLF waiver, you should follow our step-by-step instructions to see if your employer qualifies.
  • You should apply for a Direct Consolidation Loan on or before October 31, 2022, if: Your employer is a qualifying public service employer OR you are uncertain about your employer, but want your loans to qualify for PSLF, TEPSLF, and the limited PSLF waiver.
  • NOTE: If you are uncertain about your employer eligibility, you should review your account and carefully consider the pros and cons of loan consolidation based on your loans and circumstances. For more information, please refer to Federal Loan Consolidation.

How Does it Work?

Under this limited PSLF waiver, periods of repayment on FFELP Loans, Perkins Loans, and Direct Loans made to student borrowers will count toward PSLF forgiveness.

The limited PSLF waiver does not make any changes to the public service employment requirements or what counts as qualifying employment. To opt into the limited PSLF waiver, you must do two things:

  • Have or get Direct Loans by consolidating loans made under other loan programs into a Direct Consolidation Loan. The deadline to apply for this consolidation is October 31, 2022.
  • Submit a PSLF form to the PSLF Servicer by October 31, 2022. That form must be approved by the PSLF Servicer; that means you may miss your opportunity for the limited PSLF waiver if your form is denied after the deadline. The best way to avoid this is to consolidate and apply early, so that you have time to make corrections to your PSLF form if needed.

Repayment Histories

Your repayment history is maintained in Federal Student Aid (FSA) data systems. You will not need to provide any repayment histories or request histories from your servicers prior to consolidating.

Parent PLUS Loans

Parent PLUS Loans will not be directly evaluated for credit under the limited PSLF waiver, regardless of whether the loan was made under the Direct Loan or FFEL Program. However, if you had a mix of Parent PLUS Loans and FFELP loans that you received as a student, ED will consider the qualifying periods on the loans you received as a student as months of qualifying payments on the Direct Consolidation Loan.

EXAMPLE:

You were in repayment on a FFELP Parent PLUS Loan from January 2012 through December 2015 and on a FFELP Subsidized Stafford Loan from January 2010 through December 2015. You consolidated both loans in December 2015.

While the repayment status history on the FFELP Parent PLUS Loan will not be considered, the repayment status on the FFELP Subsidized Stafford Loan will be considered. The entire Direct Consolidation Loan made in December 2015 would receive credit under the limited PSLF waiver for the period of January 2010 through December 2015.

However, if you only had the FFELP Parent PLUS Loan and consolidated it, you would not receive credit under the limited PSLF waiver.

Check Your Employer for PSLF Eligibility

We have step-by-step instructions for you to check the eligibility of your current and past employers for PSLF.

  1. Create an FSA ID or use your existing FSA ID to log in to the StudentAid.gov website.
  2. Enter the PSLF Help Tool and proceed to Step 1.
  3. Enter your Federal Employer Identification Number (EIN) to look up your employer. You can find this number on your IRS W-2 form.
  4. The PSLF Help Tool will confirm or deny your employer’s eligibility for PSLF, TEPSLF, and the limited PSLF waiver.

Frequently Asked Questions about the Limited PSLF Waiver

  • How soon can I benefit from the limited PSLF waiver?

    The Department is working with the PSLF Servicer to review and update borrower accounts. It may take several months to complete processing for these changes and for account updates to reflect increased number of PSLF payment counts. If you apply for a Direct Consolidation loan, we will work hard to make sure it is processed expediently. If you are going to consolidate for the limited PSLF waiver, it is best to start now.

  • How do I consolidate my loan?

    You can access the Direct Consolidation Loan Application at StudentAid.gov. That page also has information about who can consolidate and what to expect when you consolidate.

  • Which non-Direct Loans can I Consolidate for credit under the limited PSLF waiver?

    You can only receive credit under the limited PSLF waiver for non-Direct loans if you include them in a Direct Consolidation Loan first. The deadline to apply for consolidation is October 31, 2022. This would include FFELP, Federal Perkins and other federal loans.

    Visit StudentAid.gov/aid-summary to find out what types of loans you have.

  • I have never worked in public service, will I qualify?

    To qualify for PSLF under the limited waiver, you should currently be working for or have worked for a qualifying government or not-for-profit employer. To determine if any of your employer(s) qualify, log in to the FSA website and use the PSLF Help Tool.

Income-Driven Repayment Plan Waiver

Temporary Changes to the Income-Driven Repayment Plan Program

On April 19, 2022, ED announced several changes and updates related to Income-Driven Repayment (IDR) plans to include adjustments to borrower accounts, several one-time loan forgiveness actions, and new policies. Currently, these adjustments will be made to only Direct Loans and Federally held FFELP Loans.

All FFELP loans serviced by AES are commercially held FFELP. You may be able to benefit if your FFELP Loans serviced by AES are consolidated into a Direct Consolidation loan before ED completes its implementation of the changes, which is estimated to be no sooner than January 1, 2023. Before consolidating, you should consider the pros and cons of Direct Loan consolidation. Please refer to Federal Loan Consolidation for additional information.

Refer to the StudentAid.gov website for additional information on the IDR opportunities.

Frequently Asked Questions About the Temporary IDR Waiver

  • What exactly will happen to my FFELP Loans if I consolidate my loans into a Direct Loan Consolidation?

    The following actions will occur:

    1. All borrowers with loans held by ED (Direct Loans and federally held FFELP Loans) who have accumulated time in repayment for at least 20 or 25 years will see automatic forgiveness of their loans. Other borrowers will receive a one-time adjustment to their account that may increase the number of payments counted toward IDR forgiveness. This adjustment will count all months in which a loan was in repayment status toward IDR forgiveness regardless of the payment amount made, loan type, or repayment plan. Time in repayment status will include the following:
      • Any month during which a loan was in repayment status
      • Any month during which a loan was in a COVID-related deferment or forbearance
      • Any month during which a loan was in a military-related deferment
      • Any month during which a loan was reported to have an unreasonably long grace period
      • Any month during which a loan was in a deferment status (except In-School Deferment) prior to January 1, 2013
      • Any month during which a loan was in an Economic Hardship Deferment on or after January 1, 2013
      • Any month in a forbearance status (excluding COVID-19) if the borrower had 36 or more cumulative months in forbearance
      • Any month within a 12-month or longer consecutive string of months in forbearance (excluding COVID-19)
    2. There will be a one-time account adjustment which will count 12 or more months of consecutive forbearance and 36 or more months of cumulative forbearance toward IDR and PSLF. If based upon this adjustment your payment count is determined to be 20 or 25 years of payments, you will automatically receive loan forgiveness.
    3. Borrowers who qualify for forgiveness at the 20- or 25-year threshold because of the actions taken by ED may receive a refund for any overpayments on their Direct Loan.
    4. In the future FSA will make changes so that borrowers will be able to see on their StudentAid.gov account their IDR payment counts to track progress toward IDR forgiveness. There’s no timeframe yet for when this will be available, but it will be announced on StudentAid.gov.
  • What additional changes are happening?

    FSA will be issuing new guidance to student loan servicers in the future to ensure accurate and uniform IDR payment counting practices. This includes further simplifying payment counting by allowing more loan statuses, such as certain types of deferments and forbearances, to count toward IDR forgiveness.

  • Do these changes impact only Direct Loan borrowers? What about FFELP borrowers?

    The changes that will update IDR counts will impact both Direct Loans and federally managed FFELP Loans. Commercial FFELP borrowers, such as those borrowers with loans serviced by AES, seeking to take advantage of these changes must consolidate their commercial FFELP Loans into a Direct Consolidation Loan before FSA completes implementation of these changes; FSA expects the changes will be implemented no sooner than January 1, 2023. Once the consolidation is complete, IDR payment counts will be updated for that loan.

  • Is there any action I need to take as a borrower?

    Yes, you need to consolidate your FFELP Loans into a Direct Consolidation Loan in order to take advantage of any benefits under this announcement. Keep in mind, you must take action and consolidate before ED completes its implementation of the changes, which is estimated to be no sooner than January 1, 2023.

    In addition, you should continue to check StudentAid.gov for the latest updates.

  • Do these changes to the IDR plan impact only borrowers who have been, or currently are on, an IDR plan?

    No, these changes will impact all borrowers no matter their current or previous repayment plan.

  • Are there any tax implications for having my loans forgiven based upon these changes?

    Loans forgiven through IDR do not create any tax liability for the borrower because of the American Rescue Plan Act. Specifically, the law states that student loans that are discharged (forgiven) between December 31, 2020, and January 1, 2026, will not be subject to taxation.

  • How do these changes impact the limited PSLF waiver?

    FSA will conduct a one-time account adjustment that will count forbearances of more than 12 consecutive months and more than 36 cumulative months toward PSLF forgiveness.

    Additionally, FSA will count months spent in deferment toward both IDR forgiveness and PSLF (except for in-school deferment) for borrowers who had periods of deferment prior to 2013. This addresses concerns on FSA’s data which does not distinguish IDR-eligible deferments from other deferments prior to 2013.

    You are not required to take any action to have this adjustment applied to your account. FSA will work with the PSLF servicer to automatically make adjustments to borrowers’ accounts in late fall 2022.