As borrowers gear up for the student loan repayment restart, there are many temporary programs ending and essential deadlines to understand.
Temporary Expanded Public Service Loan Forgiveness and the Limited Waiver on Public Service Loan Forgiveness may sound similar, but these two very different programs have different rules and deadlines. For borrowers who are not chasing PSLF, there is a one-time update happening that could help them qualify for forgiveness years earlier.
This article aims to help borrowers sort out the various relief programs and ensure that no deadlines get missed.
The Limited Waiver on Public Service Loan Forgiveness Deadline
We will get the bad news out of the way first. The deadline to take advantage of the Limited Wavier was October 31, 2022.
The Limited Waiver on PSLF was created to help borrowers qualify for PSLF even if they signed up for the wrong repayment plan or had loan eligibility issues.
Because the Limited Wavier was created using temporary legislative authority, this program is unlikely to restart.
However, the good news is that Temporary Expanded Public Service Loan Forgiveness is still in effect, and it can help many PSLF borrowers who might have missed out on the Limited Waiver.
Temporary Expanded Public Service Loan Forgiveness
The TEPSLF program was created by Congress when it became apparent that the rejection rate on PSLF applications was way too high. At the time, reports showed over 99% of borrowers were rejected.
TEPSLF allows borrowers to qualify for PSLF even if they were on the wrong federal repayment plan. For example, this program helps borrowers who enrolled in the extended or graduated repayment plans and hoping to qualify for PSLF.
Even though the TEPSLF program is temporary, it doesn’t end on any set date. Instead, TEPSLF ends when the money set aside by Congress runs out.
The good news for borrowers is that the TEPSLF program is still well-funded. The bad news is that you can’t benefit from the program until you have reached 120 payments towards PSLF. In other words, you can’t fix it immediately if you had two years of payments on the wrong repayment plan. You have to wait until you have worked in a PSLF job for the required ten years.
Sherpa Tip: The TEPSLF program and the Limited Waiver were both created to solve the same problem. Not surprisingly, they overlap in many different ways. However, there are several key differences between the programs that borrowers should understand.
The One-Time IDR Payment Count Update
Over the years, servicers have steered many borrowers towards deferments or forbearances when the borrower would have been better off signing up for an Income-Driven Repayment (IDR) plan.
To correct this issue, the Biden Administration is conducting a one-time review of borrowers’ repayment histories and awarding credit for months that previously would not have counted. In addition to helping borrowers with deferments and forbearances, the program will help borrowers who were enrolled in balance-based repayment plans such as the standard or graduated repayment plans.
There isn’t a deadline for most borrowers to take advantage of this program, as it happens automatically. However, if you have commercially-held FFEL loans or Perkins or HEAL loans, you will need to consolidate your loans into a federal direct consolidation loan. The deadline for borrowers to consolidate into a direct loan is December 31, 2023.
One-Time Student Loan Forgiveness Deadlines
Biden’s plan to forgive up to $20,000 per federal borrower is currently tied up in the courts. It is possible that the program won’t happen at all; things may go as planned, and there may be some changes. We don’t know at this point.
For now, there are two significant deadlines in place. First, borrowers with commercially-held FFEL loans needed to consolidate before September 29, 2022, in order to benefit from the program. Sadly, this deadline was announced the day after it passed. The move was unfair to FFEL borrowers, but it might have been necessary for the program to survive in the courts.
The deadline for all other borrowers is December 31, 2023. As noted earlier, this deadline is subject to change based on the litigation, so this situation is worth monitoring closely. For now, the website to apply is closed due to a court order. If the court lifts the order and the applications go live again, borrowers should apply as quickly as possible to ensure they don’t miss out.
Federal Student Loan Payment and Interest Pause
The exact date that the federal student loan payment and interest pause ends is somewhat complicated.
If the Supreme Court makes a final ruling on the program — whether good or bad for borrowers — repayment and interest resume 60 days later.
However, if the Supreme Court moves slowly, the payment pause will end on June 30, 2023. At that time, borrowers will have at least 60 days before payments are required, and interest gets charged.