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Published: Nov 29, 2021 10 min read
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If there was ever a good time to slog through the application process for student loan forgiveness, now is it.

Thanks to some recent changes announced by the Education Department, hundreds of thousands of borrowers should be closer to qualifying for loan forgiveness. But the changes are mostly temporary, and many borrowers will have to submit paperwork in the coming months to take advantage of the relaxed rules.

At the center of the changes are the complicated eligibility requirements for the Public Service Loan Forgiveness (PSLF) program, which awards total loan forgiveness to borrowers who work at least 10 years in often low-paying government and nonprofit jobs. Notorious for its low rate of approved applications, borrowers often get thrown off track by having the wrong type of loan or repayment plan.

The department’s new temporary waiver aims to fix that. It allows payments from loan types and payment plans that were not previously eligible to be counted toward the 120 total payments needed to qualify for forgiveness.

“These temporary fixes are simply fair treatment of people who tried to follow the rules, but were denied due to difficult-to-understand nuances and technicalities,” says Anna Helhoski, a student loan expert at NerdWallet. “Under the waiver, some of these borrowers will see their loans forgiven or, because certain past payments will now count, they’ll be closer to forgiveness.”

The department estimates this waiver alone could help nearly 600,000 borrowers get their student debt forgiven. So far, more than 30,000 borrowers have been successful, with about $2 billion in debt relief already approved in the first round.

Yet there could be some challenges along the way, including simply spreading the word to affected borrowers. About one third of 501(c)(3) and nonprofit employees said they were not aware of these recent changes to the PSLF program, according to a survey by the Student Debt Crisis Center (SDCC) and Savi. That means thousands of borrowers could be leaving money on the table.

The waiver will run through October 31, 2022, so borrowers will need to take action before that date to have previously ineligible payments counted. If you work in a public sector or at a non-profit organization and think there’s any chance you could qualify, it’s worth trying, even if you’ve been denied in the past. Here’s what to do:

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1. Get a handle on your current loan situation

The first step is to find out what types of loans you have. This will dictate your next steps.

The easiest way to do this is by logging into the Department of Education's Federal Student Aid website. Here, you’ll be able to see all of your federal loan details. If you need guidance regarding which loans currently qualify for PSLF, and what to do if they don’t, you can use the PSLF Help Tool, which has been updated to reflect the criteria outlined in the new waiver.

If you don’t already have an account set up with the Department of Education, you’ll need to do that first. Keep in mind that you’ll need your most recent W-2 or your employer's Federal Employer Identification Number (EIN), and you must complete the process in a single session. It should take less than 30 minutes.

2. Consolidate your loans, if needed

Depending on the types of loans you have, you may need to consolidate them before you can move forward in the process.

In the past, certain federal loans were not eligible for PSLF, including loans made through the Family Federal Education Loan (FFEL) program and Perkins loans. If you have these loans, you need to consolidate. The PSLF program now temporarily allows payments made on these loans to count toward the 120 needed to qualify, but only if borrowers consolidate them into a Direct loan by the October deadline.

To consolidate, you’ll have to fill out and submit the free Federal Direct Consolidation Loan Application and Promissory Note. This can be completed online.

3. Fill out your Employment Certification Form

If you have Direct loans, you can skip straight to filing the Public Service Loan Forgiveness form, says Savi co-founder Tobin Van Ostern. This is officially known as the Employment Certification Form, and it’s the one you need to file before the October deadline.

This is the form that the government uses to update your payment count to include any payments you made toward your loans while working in a public service job. You’ll need to certify your employment for every year you’ve been in a qualifying job. This may be simple if you've stayed with a single employer for the whole time, but it could take some time if you've got to track down contacts from multiple past jobs. You'll need a signature from an authorized person at each place you worked.

If you have any uncertainty around your eligibility, Van Ostern recommends filling out the form anyway.

“If you get rejected, you should get some information as to why you were rejected and how you can fix that,” he says.

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4. Submit your paperwork ASAP

Van Ostern also recommends borrowers act sooner than later.

“One of the big reasons is that the main servicer for Public Service Loan Forgiveness — FedLoan — is leaving,” he says. Some of those loans are currently in the process of transferring to a new servicer, MOHELA. Some accounts will also eventually go to Nelnet, Edfinancial and Navient (which is also in the process of exiting the servicing space and transferring accounts to Maximus). “I’d recommend people try to file now so that they can get into the FedLoan system before that transition occurs,” he said.

Another big reason not to procrastinate: longer customer service wait times and paperwork backlogs. Not only are borrowers and their servicers navigating several transitions, but federal payments are also set to resume on Feb. 1, following nearly two years of forbearance in response to the pandemic. Add in the wave of borrowers applying for PSLF at the same time, and it’s sure to be a major headache for anyone attempting to have their paperwork processed or get questions answered.

“I suspect that January and February will be very busy for servicers and the Department of Education, so I really encourage people to try to get in their paperwork before the end of this calendar year,” Van Ostern says. He added that if it’s the first time you’ve submitted paperwork related to PSLF, it could take two to three months to hear back. If you have filed in the past, processing times will likely be much faster.

5. Don’t assume you’re ineligible

One of the reasons why so many borrowers are unaware of these changes to PSLF or believe they aren’t eligible is because they haven’t been contacted by the Department of Education. But if you’ve never submitted paperwork related to PSLF to the department in the past, there’s a good chance they don’t even know you exist as a public service worker. That doesn’t mean you don’t qualify for forgiveness.

“Don't assume that just because you haven't been contacted, you're not eligible,” Van Ostern says. “It’s worth trying — it doesn’t take very long and there’s really no downside.”

Bonus tip: What if you made too many payments?

Under the original PSLF rules, it’s possible to get refunded if you make more than 120 qualifying payments. This can happen, for instance, if you continue making payments while your paperwork is being processed over several months. However, if you weren’t eligible for forgiveness until the waiver took effect, and you now have more than 120 qualifying payments under the new rules, it’s unclear whether you’ll get refunded for the extras.

“The Department of Education has not released very specific guidance on this,” Van Ostern says. “With that said, at this point, our understanding is that it depends basically on which of the changes is making you newly eligible.” For example, if you are newly eligible for PSLF because you have FFEL loans, you can consolidate and have previous payments qualify toward the 120, but you will not be eligible to collect overpayments.

But there are other situations where it’s not as clear. For example, if you had Direct loans, but you were on the wrong repayment program. Van Ostern says you should go ahead and attempt to get refunded for any overpayments by calling your servicer and asking, but it’s not guaranteed that it will happen.

More from Money:

How to Get Ready for the Upcoming Return of Student Loan Payments

This New Tool Finds Job Openings at Companies That Will Help You Pay Down Your Student Loans

It Just Got a Lot Easier to Qualify for Public Service Loan Forgiveness