To our government’s credit, officials took steps to address the issue. Even though they moved at the speed of government bureaucracy, new policies addressed many major PSLF issues.

Congress first took action to create a program called Temporary Expanded Public Service Loan Forgiveness (TEPSLF). Later, under the authority of the CARES Act, the Department of Education announced the Limited Waiver to Public Service Loan Forgiveness.

Both programs were created to fix the problems with PSLF. There are many similarities, but there are also some key differences that borrowers should understand.

How TEPSLF and the Limited Waiver Help Borrowers

Many of the PSLF rejections came from ineligible loans or ineligible repayment plans. Some borrowers had commercially-held FFEL loans that needed to be consolidated to qualify for PSLF. Others signed up for ineligible repayment plans like Graduated and Extended Repayment.

Many borrowers made these mistakes because they relied upon questionable guidance from loan servicers.

When Congress created Temporary Expanded Public Service Loan Forgiveness, it was designed to help borrowers who were on the wrong repayment plan. However, one of the biggest negatives of TEPSLF is that it only helps borrowers with repayment plan eligibility issues. Borrowers with FFEL or Perkins loans can’t benefit from TEPSLF.

To correct the shortcomings of TEPSLF, the Department of Education announced the Limited Waiver on Student Loan Forgiveness. The limited waiver helps borrowers who were on the wrong repayment plan and it also helps borrowers who have loan eligibility issues.

As suggested by their respective names, the TEPSLF program is temporary and the Limited Waiver is only available for a short period of time.

How Long Each Program Lasts

The Limited Waiver on Student Loan Forgiveness officially ends on October 31, 2022. Because the Department of Education created the program under the Covid-19 relief bill called the CARES Act, an extension of the limited waiver is unlikely.

Projecting the end of TEPSLF is far more difficult. When Congress passed the original TEPSLF legislation, they set aside $700 million in available funding. Once the money set aside runs out, the program officially ends.

According to Department of Education Records, as of April 2022, $283 million of the original $700 million has been used.

Steps Required to Benefit

The steps required to qualify for forgiveness are now relatively straightforward.

TEPSLF initially had a separate application process and borrowers had to first get rejected from PSLF before applying to TEPSLF. This awful policy no longer exists.

TEPSLF is now part of the standard PSLF application. Borrowers don’t have to take any extra steps. If you apply for PSLF, you also apply for TEPSLF.

Qualifying under the limited waiver is slightly more complicated for some borrowers. If you have previously applied for PSLF, the Department of Education will automatically review your account to see if you qualify for additional credit under the limited waiver. Thus, for most borrowers, no additional step is necessary.

However, if you have FFEL or Perkins loans, you must consolidate your loans by October 31, 2022. If you don’t consolidate, you can’t take advantage of the limited waiver.

Finally, if you work in a public service job, but you’ve never completed a PSLF application or employer certification, it is critical to get that form filed as soon as possible.

Which is Better: TEPSLF or the Limited Waiver

Both programs attempt to resolve the same issue. However, there are some key differences that make one program far more useful than the other.

The Limited Waiver will help far more borrowers due to several important factors:

• The Limited Waiver helps borrowers who signed up for the wrong repayment plan and it helps some borrowers with ineligible loans. TEPSLF only helps people with repayment plan selection issues.
• The Limited Waiver awards partial credit. Under the limited waiver, the Department of Education reviews previous applications and updates PSLF payment counts accordingly. Some people qualify for forgiveness right away, while others are moved slightly closer to the required 120 certified payments.
• TEPSLF is all or nothing. Either your entire loan balance is forgiven under TEPSLF, or you don’t benefit from the program at all.
• There isn’t a cap on the total amount of forgiveness available under the limited waiver.

The latest Department of Education statistics support this assessment. As of April 2022, over 112,000 borrowers have had more than $7 billion worth of federal loans forgiven under the limited waiver. TEPSLF helped just over 6,000 borrowers get $283 million forgiven so far.

However, there is one remaining advantage to TEPSLF. Based upon the amount of funding set aside, TEPSLF will be available to borrowers long after the limited waiver has expired.

The post What is the Difference Between the Limited Waiver and Temporary Expanded Public Service Loan Forgiveness? appeared first on The Student Loan Sherpa.

It finally happened!

The Department of Education is finally fixing many of the issues that made Public Service Loan Forgiveness a mess.

There is a ton to unpack with this announcement, but two critical details stand out:

Who is now eligible for PSLF?

If you lost out on time because you were on the wrong repayment plan or because you had loans that needed consolidated, such as FFEL or Perkins loans, your previous payments may now count.

Even though there are some significant changes to PSLF, two requirements remain:

Parent PLUS loan borrowers are the one group that won’t benefit from the major changes.

Some borrowers will see their count towards PSLF automatically updated. Others will need to consolidate before the October 31, 2022 deadline to take advantage of the new rules.

Who Needs to Consolidate?

Federal student loan consolidation doesn’t lower interest rates. Instead, consolidation is a tool for borrowers to gain program eligibility.

Consolidation converts debt that isn’t eligible into PSLF into an eligible loan. Historically, the downside to consolidation was that it reset the forgiveness clock to zero.

The changes announced today meant that the reset doesn’t happen. If you made otherwise eligible payments, consolidating means that the old payments will now count towards PSLF. For many borrowers, this might mean forgiveness comes years earlier than initially anticipated.

If you have FFELP loans or Perkins loans, they are not eligible for PSLF. If you consolidate, the loans become eligible. Under the new rules, prior payments still count towards PSLF. The one exception is Parent PLUS loans. Parent PLUS loans can still become eligible for PSLF, but the payments made before consolidation won’t count.

The big deadline for the borrowers who need to consolidate is October 31, 2022.

Sherpa Tip: This is a complicated issue. If you are confused about whether or not your loans need to be consolidated for PSLF, I’d suggest taking a couple of steps:

First, visit the studentaid.gov website to get a complete list of your federal loans and how they are classified.

Additionally, call your servicer to discuss the loans you have and whether or not they require consolidation.

Updating Payment Counts

If you have previously applied for PSLF or submitted an Employer Certification Form, your payment count should automatically update in the coming weeks.

Borrowers with loans serviced by MyFedLoan should click on the “check my progress” link available on the Account Summary page. It looks like this:

I’m told that the FedLoan payment counts may take months to update. However, borrowers should receive an email in the coming days, or weeks at the latest, with updated counts.

If MyFedLoan does not service your loans, it means you have not completed an Employment Certification Form or applied for PSLF. If you think there is even a tiny possibility that you might qualify for PSLF, send in an Employer Certification form as soon as possible.

Working with FedLoan Servicing (MyFedLoan)

Working with MyFedLoan may present a significant challenge for borrowers trying to navigate the expanded PSLF rules.

Assisting borrowers with a major policy change is a challenge for loan servicers under the best of circumstances. Because FedLoan servicing is ending their contract with the Department of Education, difficulty is almost a certainty.

By December, MyFedLoan will be out of the loan servicing business. This means they don’t have much of an incentive to hire new staff or to train people.

For borrowers, the usual loan transfer advice still applies, but downloading documents and records takes on added importance. You may have a prior payment that only recently became eligible under the new rules. Your count towards forgiveness should automatically be updated, but if it isn’t, you will need to prove your eligibility. If the records get lost in the transition, you won’t have the documents you need.

Refunds for Previous Payments

One of the most remarkable aspects of the new rules is the refund provision for borrowers.

If you made “extra” payments due to the rule changes, you should receive a refund for the additional payments. For some borrowers, this might mean an enormous check is coming soon.

Unfortunately, the refund only applies to borrowers who earn forgiveness under the new rules. If you have previously had your loans forgiven under PSLF, additional payments due to expanded eligibility will not be refunded.

Expanded PSLF Example

To illustrate the new rules in action, an example might help.

For our example, let’s assume the following for Evan, our example borrower:

In this example, Evan had two major mistakes in his quest for PSLF. First, he was on the wrong repayment plan. Second, Evan waited to consolidate and lost precious time towards PSLF.

Under the new rules, the period between 2010 and 2015 now counts towards PSLF. Additionally, the time between 2005 and 2010 should also count towards PSLF.

This means that Evan earned PSLF in 2015 under the revised rules, even though he thought he was starting from scratch in 2015. Evan should qualify for a refund for all payments made from 2015 until the present.

Expanded Eligibility Rules and Conditions

In the coming weeks and months, expect plenty of clarification on the rules and how to correct mistakes.

For now, borrowers can find the most comprehensive list of rules on the Limited Waiver page on studentaid.gov.

This page will be updated as additional information becomes available.

The post PSLF Expanded to Include FFEL, Perkins Loans, and Graduated, Extended Repayment PLans appeared first on The Student Loan Sherpa.

The good news is that this particular problem is so common that Congress tried to fix it with special legislation.

The bad news is that there still might be other issues. Additionally, the fix is temporary. Borrowers can’t afford to delay taking action when addressing a repayment plan mistake.

Repayment Plans Ineligible for PSLF

Two plans have caused significant borrower confusion for Public Service Loan Forgiveness eligibility. In some cases, loan servicers even told some borrowers that the following plans were PSLF eligible.

Sadly, these plans do not count towards Public Service Loan Forgiveness under the standard rules:

The Extended Repayment Plan – This plan stretches borrower payments out over a 25 year period. Many borrowers looking for lower payments selected the extended repayment plan.

The Graduated Repayment Plan – This plan works in two-year chunks. It lasts for ten years. Rather than making the same payment for 10 straight years, the borrowers monthly payment goes up every two years until the balance is zero. The idea is to help borrowers ease into repayment during the early stages of their careers. There is also a 30-year version of this plan called the Extended Graduated Repayment Plan.

Borrowers making payments under the Extended Plan and both versions fo the Graduated Plan cannot get the payments certified toward PSLF.

The Fix from Congress

When the first round of PSLF application results were announced, the numbers were ugly. Over 99% of applications were denied. The news devastated applicants and terrified those counting on PLSF in the future.

Then something surprising happened. Congress saw a problem and fixed it. They created Temporary Expanded Public Service Loan Forgiveness or TEPSLF. Under TEPSLF, a borrower who was on the wrong repayment plan can still get their student loans forgiven.

However, there is a significant limitation to the program: it is temporary. Congress allocated $700 million. When the money runs out, the program ends. As of the last status update, borrowers already claimed $95 million of funds. Unfortunately, Department of Education records haven’t been updated in over six months, so we really don’t know how much funding remains.

Two Cents from the Sherpa: If the TEPSLF funding dries up quickly, Congress may allocate additional resources to help more borrowers. TEPSLF passed through Congress with bipartisan support, and if there was a need for the program to continue, further legislation could happen.

Other Issues That Might Remain

Selecting the wrong repayment plan isn’t the problem for people chasing PSLF.

The following issues have also caused problems for many borrowers:

Ineligible Loans – Not all federal loans are eligible for PSLF. Some loans, like FFEL loans or Perkins loans, may be consolidated into a federal direct consolidation loan to gain eligibility. Unfortunately, consolidation also restarts the loan forgiveness clock.

Ineligible Employers – Many borrowers think their employer counts as a PSLF employer. Sadly, many borrowers are wrong about their employer’s eligibility. The Department of Education’s PSLF Help Tool is a great resource to help borrowers determine employer eligibility.

Unfortunately, TEPSLF does not fix either of the above issues. Worse yet, there isn’t a program like TEPSLF to help borrowers fix ineligible loans after the fact. As a result, borrowers with employer or loan-type issues likely have to fix their mistakes and start from scratch on the path to PSLF.

When Loan Servicers Give Bad Advice About the Wrong Repayment Plan

Over the years, I’ve received many heartbreaking emails from readers who thought they were on their way to PSLF and later learned there was a fatal flaw with their application. In many cases, loan servicers mistakenly assured borrowers that they were on their way towards loan forgiveness. Put simply, borrowers got lousy advice.

This situation is especially devastating because the wrong information came from federal loan servicers — companies paid by the government to oversee student loan repayment.

Further complicating the situation is that few options exist for misled borrowers. Hiring an attorney is expensive, and I’ve never heard of a borrower winning forgiveness in court on these grounds. Many borrowers have to start PSLF from the beginning or pay off their loans in full.

Applying for Temporary Expanded Public Service Loan Forgiveness (TEPSLF)

Because funding is limited, it is crucial for borrowers to apply as soon as possible to TEPSLF.

Borrowers can complete the required paperwork in one of two ways:

• Using the PSLF Help Tool
• Downloading and filling out this form

After completing and signing the documents, borrowers submit it to FedLoan Servicing, the federal servicer that administers the PSLF program.

The form can be mailed to this address:

U.S. Department of Education
FedLoan  Servicing
P.O. Box 69184
Harrisburg, PA 17106-9184

Those that still fax can fax their application to 717-720-1628.

Finally, the document can be uploaded directly to FedLoan Servicing through their website.

The post Help! I’m on the Wrong Repayment Plan for Public Service Loan Forgiveness appeared first on The Student Loan Sherpa.