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Four Fixes for Biden’s Expanded Public Service Loan Forgiveness

The limited waiver is a huge break for PSLF borrowers with repayment plan and loan eligibility issues. Unfortunately, this fix overlooked a few major issues.

Written By: Michael P. Lux, Esq.


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The recently announced limited waiver on Public Service Loan Forgiveness was life-changing news for many borrowers. Many people who received bad information from their loan servicers now had a path to PSLF. It was one of the most significant student loan developments in years.

Unfortuantely, many deserving borrowers may not receive the loan forgiveness that they have earned.

However, with a few tweaks to the limited waiver program, Biden could ensure that fewer borrowers get left behind.

A Note from the Sherpa: This article contains suggestions and ideas for improving the PSLF limited waiver.

For those not familiar with the program, check out this article on the many loans and repayment plans that now may qualify for Public Service Loan Forgiveness.

Add Parent PLUS Borrowers to the PSLF Limited Waiver

Parents are the most notable group left behind in the expanded Public Service Loan Forgiveness.

Getting a Parent PLUS loan to qualify for PSLF has always been possible but unnecessarily complicated. The limited waiver could have streamlined things for borrowers.

Instead, the program excluded Parent PLUS loans.

There isn’t a clear reasoning behind the exclusion. The government should make up its mind on Parent PLUS loans and PSLF. Either they qualify, or they don’t. Setting up many logistical hurdles so that most borrowers can’t qualify as a practical matter is wrong.

FFEL Joint Consolidation Loans

Though discontinued, FFEL spousal consolidation loans remain a significant issue for many student loan borrowers.

Unfortunately, the Department of Education denied many applications to consolidate FFEL joint loans into direct loans.

Admittedly, the logistics of PSLF applications for loans with two borrowers is complicated. However, the Department of Education has a policy in place for Direct Joint Consolidation Loans.

The Department of Education should give couples the same opportunities that it offers single borrowers. In this case, it means allowing them to consolidate their FFEL loans into direct loans.

Legislation to Watch: Bipartisan legislation called the Joint Consolidation Separation Act could help borrowers as well.

If you are impacted by this rule, calling your elected representatives could make a huge difference.

Temporary Government Program Sounds Like a Scam

There are a ton of student loan scams.

Scammers often tell borrowers that they must act now to take advantage of limited government programs. Creating urgency is a frequent scammer tactic.

A limited waiver with a hard deadline sounds fishy. Borrowers previously exposed to scams may dismiss the new program as yet another scam.

Sadly, the assistance is a “limited waiver” because the CARES Act authorization lasts only a year. However, further legislation could fix this problem.

The sooner the limited waiver becomes permanent law, the better.

Servicers Not Ready for Changes

Many loan servicers are not ready to answer questions about the limited waiver.

Some loan servicers are exiting in the coming months, and others cut staff during the pandemic. Worst of all, FedLoan servicing, the company responsible for administering the PSLF program, is terminating their contract.

For some borrowers, the limited waiver program requires no additional action. Others must consolidate before the October 31, 2022 deadline. Consolidation isn’t always a good idea, so careful guidance from servicers is necessary.

Unprepared servicers mean bad advice for borrowers, which is the problem that initially created the issues that necessitated the limited waiver.

To remedy this issue, all servicers need immediate training on limited waiver basics. Servicers should also have specialists on staff to handle complicated borrower questions.

A Big Step Forward

The limited waiver is a massive development for student loan borrowers.

This is a huge step forward for many of the people who received wrong information from their loan servicer.

However, more work remains. The President and Congress need to act to ensure that deserving borrowers don’t miss out on Public Service Loan Forgiveness.

About the Author

Student loan expert Michael Lux is a licensed attorney and the founder of The Student Loan Sherpa. He has helped borrowers navigate life with student debt since 2013.

Insight from Michael has been featured in US News & World Report, Forbes, The Wall Street Journal, and numerous other online and print publications.

Michael is available for speaking engagements and to respond to press inquiries.

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