What's a student loan waiver?

In late 2021, the Biden administration announced the Public Service Loan Forgiveness limited waiver — a move to help make it easier for federal student loan borrowers to qualify for the Public Service Loan Forgiveness Program.

If you work for a government agency or not-for-profit organization, you may qualify for federal student loan forgiveness under the PSLF Program. Here’s what you need to know about the PSLF waiver.

• What’s a student loan waiver?
• How does the PSLF student loan waiver work?
• What PSLF requirements are new?
• What PSLF requirements are staying the same?
• Who qualifies for the PSLF student loan waiver?
• What to do if you don’t qualify for the PSLF student loan waiver

What’s a student loan waiver?

The student loan waiver is a temporary waiver of rules under the Department of Education’s Public Service Loan Forgiveness Program. The waiver lasts until Oct. 31, 2022, and gives borrowers PSLF credit for certain past payments that wouldn’t have otherwise qualified.

For some borrowers, it can mean full federal loan forgiveness much sooner than expected. In fact, in February 2022, the Education Department forgave nearly $5 billion in student loan debt for 70,000 borrowers under the program.

What is Public Service Loan Forgiveness (PSLF)?

The Public Service Loan Forgiveness Program forgives — or wipes clean — the federal student loan debts of qualifying borrowers employed full-time by federal, state, local, or tribal governments or not-for-profit organizations.

Under normal circumstances, you must have Federal Direct Loans and make at least 120 qualifying payments while working for a qualifying employer to be eligible. You also must be on an income-driven repayment plan, which bases your monthly payment on your earnings.

To learn more about this program, see the Department of Education’s PSLF information page.

How does the PSLF student loan waiver work?

The Public Service Loan Forgiveness waiver is a temporary pause on some of the PSLF Program’s traditional requirements. The Department of Education announced the waiver on Oct. 6, 2021, and it runs through the end of October 2022.

For years, the PSLF Program has seen low adoption rates due to servicing problems, misinformation, and other issues. This new waiver was an attempt to make qualifying easier for many borrowers, giving the average borrower credit for an additional two years of qualifying payments instantly.

"Borrowers who devote a decade of their lives to public service should be able to rely on the promise of Public Service Loan Forgiveness," U.S. Secretary of Education Dr. Miguel Cardona said in the announcement of the waiver. "The system has not delivered on that promise to date, but that is about to change for many borrowers who have served their communities and their country."

What PSLF requirements are new?

The waiver changes quite a few things about the PSLF Program, including what payments qualify, what loans are eligible, and more.

Here’s a breakdown of the new requirements:

• You can receive credit for payments on Direct Loans, Perkins loans, and FFEL loans. If you have Perkins Loans or FFEL loans, you’ll need to consolidate them into a Direct Consolidation Loan before the remaining balance can be forgiven.
• Any repayment plan counts. You don’t need to be on an income-driven repayment plan to qualify.
• Late and partial payments count. You can also count payments for the time spent on COVID-19 forbearance or military deferment.
• You don’t need to be currently employed by a government agency or not-for-profit to apply and qualify for forgiveness. However, you must have made your 120 payments while working for a qualifying employer.

Keep in mind that these changes only last until Oct. 31, 2022. Unless the waiver is renewed at that point, the PSLF Program will revert back to its previous eligibility requirements.

If you don’t have federal student loans, you can compare private student loan refinance rates using Credible, and it won’t affect your credit.

What PSLF requirements are staying the same?

Some of the most basic PSLF requirements are staying the same, despite the temporary waiver that’s in place.

You’ll still need to:

• Make 120 qualifying payments.
• Be employed full-time by a government or 501(c)(3) not-for-profit organization while making your 120 payments.
• Work full-time.
• Have Direct Loans or consolidate your FFEL loans or Perkins Loans into a Direct Consolidation Loan.
• Certify the employment periods for which you’re seeking payment credit.

To certify your employment, the Department of Education requires you to fill out this PSLF Form annually or any time you change employers.

Who qualifies for the PSLF student loan waiver?

The PSLF student loan waiver only applies to federal student loan borrowers who have been employed full-time by a government or not-for-profit organization. Though payments made on Perkins Loans and FFEL loans can qualify under the waiver, you’ll need a Direct Loan or will need to consolidate your Perkins Loans and FFEL loans into a Direct Consolidation Loan before your forgiveness can be considered.

If you’re not sure whether you qualify, see these instructions (under "How to Find Out If You Qualify for Additional Payments") from the Department of Education.

What to do if you don’t qualify for the PSLF student loan waiver

If you’re struggling with your student loan payments and don’t qualify for student loan forgiveness under the limited waiver, consider these other options:

• Apply for an income-driven repayment plan. The Department of Education offers four IDR plans, which set your monthly payment based on your earnings. You’ll typically pay just 10% to 20% of your discretionary income (though this varies slightly based on the plan you enroll in). If you want to apply for an IDR plan, contact your federal student loan servicer.
• Consider a Graduated Repayment Plan. This lets you pay smaller payments upfront and then larger ones later on — once your income rises. Payments will typically increase every two years, ensuring that your loans are paid off in 10 years (or within 10 to 30 years if you have a Consolidation Loan). All federal student loan borrowers are eligible for this repayment plan. Contact your student loan servicer to apply.
• Consolidate your federal loans. Consolidating your federal student loan debt into a federal Direct Consolidation Loan can help streamline your payments. Your new interest rate will be a weighted average of all your existing loans, so it may or may not be lower. But consolidating may also help you qualify for PSLF later on.
• Apply for forbearance or deferment with your student loan servicer. If you’re facing financial hardship, you may be able to enter forbearance or deferment. These allow you to pause your payments or defer them until later on in your loan term in certain circumstances. Keep in mind that if your loans are in deferment, you won’t accrue additional interest on your loan balance. But if they’re in forbearance, interest will continue to accrue.
• Refinance your student debt into private student loans. Refinancing your federal loans into private loans may be an option if you need a longer repayment timeline, lower interest rate, or want to change other terms of your loan. But think carefully before refinancing federal student loans into a private loan: You’ll lose the many benefits that come with federal loans if you refinance into private ones.