Direct loan program student loan

These changes are important steps toward a better and stronger PSLF program, one that will move away from the current situation in which too few borrowers receive forgiveness, and too many do not receive credit for years of payments they made because of complicated eligibility rules, servicing errors or other technicalities. The Department is also working to identify further improvements to ensure public servants get the relief they deserve, including partnerships with employers and revising regulations.

These actions are informed by the more than 48, comments the Department received on a request for information on improving PSLF issued over the summer. The Department estimates that the limited waiver alone will help over , borrowers who had previously consolidated their loans see their progress toward PSLF grow automatically, with the average borrower receiving 23 additional payments.

For reference, just over 16, borrowers have ever received forgiveness under PSLF prior to this action. We anticipate that many more will also receive additional credit as we implement other changes over time, such as counting previously ineligible payments that were not affected by a loan consolidation.

Many public servants have been on the front lines of the pandemic, making personal sacrifices to keep the rest of us safe. Nonprofits are still recovering jobs lost in the last year, and some public service workers have reported they are considering leaving public service altogether.

Frontline sectors like teaching and healthcare are already seeing burnout and employee shortages. Alleviating some of the financial strain associated with student debt can help borrowers in these sectors as they continue to navigate the fallout of this pandemic. The Department will be offering a temporary opportunity to give borrowers credit for prior payments they made that would not otherwise count toward PSLF.

Any prior payments made while working for a qualifying employer will count as a qualifying payment, regardless of loan type or repayment plan. This Limited PSLF Waiver will apply to borrowers with Direct Loans, those who have already consolidated into the Direct Loan Program, and those with other types of federal student loans who submit a consolidation application into the Direct Loan Program while the waiver is in effect.

The waiver applies to loans taken out by students. The waiver will run through October 31, That means borrowers who need to consolidate will have to submit a consolidation application by that date.

Similarly, borrowers will need to submit a PSLF form—the single application used for a review of employment certification, payment counts, and processing of forgiveness—on or before October 31, to have previously ineligible payments counted. Counting prior payments on additional types of loans will be particularly important for borrowers who have or had loans from the Federal Family Education Loan FFEL Program. Around 60 percent of borrowers who have certified employment for PSLF fall into this category.

Payments prior to a Direct Loan consolidation are also covered by this waiver, so it will benefit those who consolidated their Direct Loans and lost progress toward PSLF as a result.

The Department will start automatically adjusting payment counts for borrowers who have already consolidated their loans into the Direct Loan Program and certified some employment for PSLF, and those borrowers can expect to see these adjustments in their accounts in the coming months.

Borrowers who have loans from the FFEL or Federal Perkins Loan programs will also have this waiver applied automatically, but only after they have consolidated and submitted a PSLF form, and all paperwork has been processed. Simplify what it means for a payment to qualify for PSLF. In some instances, borrowers missed out on credit toward PSLF because their payments were off by a penny or two or late by only a few days. The Department will automatically adjust PSLF payment counts for payments made on or before October 31, for borrowers affected by this issue who have already certified some employment for PSLF.

Borrowers who have not yet applied for PSLF forgiveness or certified employment but do so by October 31, will benefit from these temporary rules as well. Eliminate barriers for military service members to receive PSLF. This change addresses one major challenge service members face in accessing PSLF. Service members on active duty can qualify for student loan deferments and forbearances that help them through periods in which service inhibits their ability to make payments.

But too often, members of the military find out that those same deferments or forbearances granted while they served our country did not count toward PSLF. This change ensures that members of the military will not need to focus on their student loans while serving our country. Federal Student Aid will develop and implement a process to address periods of student loan deferments and forbearance for active-duty service members and will update affected borrowers to let them know what they need to do to take advantage of this change.

Automatically help service members and other federal employees access PSLF. Military service members and other federal employees devote themselves to serving the United States, and we should make it as easy as possible for them to get PSLF. Next year, the Department will begin automatically giving federal employees credit for PSLF by matching Department of Education data with information held by other federal agencies about service members and the federal workforce.

To date, approximately , federal employees and 17, service members have certified some employment toward PSLF. These matches will help the Department identify others who may also be eligible but cannot benefit automatically, like those with FFEL loans. Borrowers who believe there have been errors in processing their PSLF application after the Department first conducts the internal and external reviews described above will be able to use an interim reconsideration process to receive a second individual review next year.

A permanent reconsideration process is under consideration in the negotiated rulemaking process. To further strengthen oversight of PSLF, the Department will improve its reporting on PSLF, including information on timelines for processing applications and results of servicer audits. The Department wants borrowers to know about PSLF and help those who may be close to forgiveness take the steps they need to get relief.

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