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A student is bursting out of a clock with an application in hand
Mark Wang for Money

The Public Service Loan Forgiveness program has been notoriously difficult to qualify for, with a 98% rejection rate among applicants. That is, until the Biden administration temporarily updated rules surrounding how student loan borrowers working in public sector jobs can qualify for debt relief.

Last fall, the Department of Education implemented multiple changes to the program — collectively referred to as the “limited PSLF waiver” — to help more borrowers qualify for forgiveness by correcting long-standing issues around complicated program rules, poor advice from loan servicers and other challenges.

In short, the waiver expands what is considered a payment that qualifies toward forgiveness through the program. But borrowers have to fill out paperwork to have their previously ineligible payments counted.

When the new rules were announced, only about 16,000 borrowers had secured cancellation through PSLF over a period of four years. During the first seven months the limited waiver was in place, that number had ballooned to about 175,000 borrowers, equating to $10 billion in canceled debt.

Yet more than half a million public sector workers could benefit, if — and this is a big if — they know about the waiver and act before it expires on Oct. 31.

How does the PSLF waiver work?

Typically, for a borrower to have their student loan balance forgiven under Public Service Loan Forgiveness (PSLF), they must work full-time for a qualifying employer in the public service industry, such as a non-profit or government organization. At the same time, they need to have an eligible loan and be paying their student loans through an income-driven repayment plan. After 120 qualifying payments (which do not have to be consecutive), the borrower can then apply to have their debt canceled.

The strict rules around loan type often tripped up borrowers and in the worst case scenarios, some reported paying for years while working in a qualifying job and thinking they were moving close to forgiveness, only to find out they had the wrong type of loan or repayment plan.

The temporary changes to the PSLF program aim to fix that, by allowing borrowers to get credit for payments they made while not on a qualifying payment plan, including those borrowers with older Federal Family Education Loan (FFEL), Perkins, and other federal student loans. However, in order to get credit for those payments, borrowers need to consolidate their debt into a Direct Consolidation Loan before the Oct. 31 deadline.

Borrowers who were not making payments during the pandemic-era forbearance period (which is now set to expire on Jan. 1) will receive credit as if they had continued making those payments. But these borrowers need to submit a PSLF form certifying their employment for the same period of time as the suspension. Borrowers are also allowed to combine multiple sources of part-time employment to qualify.

After the waiver expires, traditional PSLF rules apply again — which means borrowers will need to have an eligible loan and be in an eligible repayment plan to get any credit toward forgiveness. As long as your payments are counted before Oct. 31, the temporary, more relaxed rules apply, which will result in more payments counted.

Will Biden extend the PSLF waiver?

Last month, President Joe Biden extended the pause on federal student loan payments and interest accrual for the seventh time. He noted that this is the final extension, and borrowers should plan to resume their payments in January. Many are wondering if he’ll provide a similar extension to the PSLF waiver.

It’s possible, though not likely. The administration used the powers granted to the Secretary of Education during periods of a national emergency to change the rules around PSLF (that’s the same reasoning it cited recently for announcing near universal loan forgiveness), according to Tricia Kollath, a financial planner and Certified Student Loan Professional.

“With the COVID-19 national emergency being extended through February 2023, it appears the administration does have the authority to make an extension of the waiver.” Kollath says. “However, since borrowers were given an entire year to make the necessary changes to qualify, I would not count on receiving an extension.”

She noted that several state Attorneys General sent the administration a formal letter requesting additional changes to the program, including an extension of the waiver. Despite that, and borrower advocates warning about the fast-approaching deadline, administration officials haven’t announced an extension and instead have focused on stressing the need to apply before the existing cutoff date.

Does the latest student loan forgiveness impact PSLF?

One of the reasons advocates want an extension of the PSLF waiver is because there are so many significant changes happening within the student loan program in the coming months, including Biden’s plan to forgive debt for more than 40 million borrowers. That plan will not affect the PSLF waiver specifically, but it will affect borrowers working toward PSLF differently depending on their balance, Kollath says.

For borrowers on income-driven repayment plans, payments are capped at a percentage of their income, rather than based on the balance size. Borrowers working toward PSLF who have balances below the $10,000 cancellation amount (or $20,000 for Pell Grant recipients) will see their remaining student loans completely eliminated. Those who have relatively low balances left after receiving up to $20,000 of cancellation will likely end up paying their loans off before making the 120 payments required for PSLF, meaning their debt will be eliminated sooner than expected.

“The people that it will not help are those with high student loan balances going for PSLF,” Kollath says. “These borrowers will end up getting a significant amount of money forgiven once the qualifying payments have been made, so it will not matter if $10,000 or $20,000 is canceled now.”

In fact, she adds, it may actually hurt some in the short-run if they live in states that tax student loan forgiveness.

How to qualify for PSLF under the limited waiver

Anyone with federal student loans who has been working in the public service sector should find out if they qualify for PSLF under the limited waiver by taking these steps:

1. Check your loans

You can log into your account to find out what kind of loans you have.

2. Determine if you need to consolidate

If you have “Direct loans,” you can skip to the next step. But if not, you need to fill out a form to consolidate your loans into a new, eligible loan. Loans must be consolidated or be in the process of being consolidated before the waiver expires on Oct. 31, 2022. The consolidation process typically takes 30 to 45 days, so it’s important to get started as soon as possible.

3. Submit an Employment Certification Form (ECF)

This can be completed by using the PSLF Help Tool within your account, then sending a form to your employer to sign. You’ll need to complete a separate form for each qualifying employer you have worked for since 2007, even if you were not working full-time or making payments.

“We don’t know what changes to the program will be made in the future, so it is best to go ahead and get the work history certified now so it will already be on file,” Kollath says.

Also, be sure you have the correct information for all employers, such as the Employer Identification Number (EIN) and your hire and termination dates, to avoid your form being rejected. If you are consolidating, submit these forms after the consolidation is complete (but before Oct. 31). If the consolidation is still in process near the end of October, Kollath says you should go ahead and submit the ECFs.

4. Make sure you’re on an eligible repayment plan

Once the limited waiver expires, the old PSLF rules apply. You’ll need to be sure you’re on a qualifying payment plan so future payments are counted properly. There are four income-based repayment plans that qualify for PSLF:

  • Income-Based repayment (IBR)
  • Income-Contingent repayment (ICR)
  • Pay As You Earn (PAYE)
  • Revised Pay As You Earn (REPAYE)

Keep in mind that the Standard Repayment Plan does qualify for PSLF, though Kollath notes that staying on this plan long-term won’t result in as much of a benefit because the plan is designed for loans to be paid off after 10 years anyway. (Note that this plan is not the same as the Standard Repayment Plan for Consolidation Loans, which does not qualify for PSLF.)

5. Follow up on your forms

Double check that these requests are processed.

“If you don’t receive any emails or communication about your request, there may be something wrong with it,” Kollath says. Be sure to check in with your loan servicer if you don’t hear anything after a couple of weeks.

If you need help with this process, the best place to go is for information about the PSLF program and waiver. You can also call your loan servicer for additional information.

Finally, keep in mind that refinancing student loans takes the loans from the federal system completely. “Private loans are not eligible for PSLF or any kind of federal forgiveness, so do not refinance if you are eligible for PSLF,” Kollath says.

More from Money:

Public Service Loan Forgiveness: 5 Steps to Getting Your Student Loans Canceled Under the Temporary Waiver

How to Apply for Biden’s Student Loan Forgiveness Program

Why Student Loan Forgiveness Could Hurt Your Credit Score