When the 99% rejection rate on initial PSLF applications was first revealed, it shocked both borrowers and government officials. By rejecting almost every borrower application, something was clearly wrong with the loan forgiveness program.
To our government’s credit, officials took steps to address the issue. Even though they moved at the speed of government bureaucracy, new policies addressed many major PSLF issues.
Congress first took action to create a program called Temporary Expanded Public Service Loan Forgiveness (TEPSLF). Later, under the authority of the CARES Act, the Department of Education announced the Limited Waiver to Public Service Loan Forgiveness.
Both programs were created to fix the problems with PSLF. There are many similarities, but there are also some key differences that borrowers should understand.
How TEPSLF and the Limited Waiver Help Borrowers
Many of the PSLF rejections came from ineligible loans or ineligible repayment plans. Some borrowers had commercially-held FFEL loans that needed to be consolidated to qualify for PSLF. Others signed up for ineligible repayment plans like Graduated and Extended Repayment.
Many borrowers made these mistakes because they relied upon questionable guidance from loan servicers.
When Congress created Temporary Expanded Public Service Loan Forgiveness, it was designed to help borrowers who were on the wrong repayment plan. However, one of the biggest negatives of TEPSLF is that it only helps borrowers with repayment plan eligibility issues. Borrowers with FFEL or Perkins loans can’t benefit from TEPSLF.
To correct the shortcomings of TEPSLF, the Department of Education announced the Limited Waiver on Student Loan Forgiveness. The limited waiver helps borrowers who were on the wrong repayment plan and it also helps borrowers who have loan eligibility issues.
As suggested by their respective names, the TEPSLF program is temporary and the Limited Waiver is only available for a short period of time.
How Long Each Program Lasts
The Limited Waiver on Student Loan Forgiveness officially ends on October 31, 2022. Because the Department of Education created the program under the Covid-19 relief bill called the CARES Act, an extension of the limited waiver is unlikely.
Projecting the end of TEPSLF is far more difficult. When Congress passed the original TEPSLF legislation, they set aside $700 million in available funding. Once the money set aside runs out, the program officially ends.
According to Department of Education Records, as of April 2022, $283 million of the original $700 million has been used.
Steps Required to Benefit
The steps required to qualify for forgiveness are now relatively straightforward.
TEPSLF initially had a separate application process and borrowers had to first get rejected from PSLF before applying to TEPSLF. This awful policy no longer exists.
TEPSLF is now part of the standard PSLF application. Borrowers don’t have to take any extra steps. If you apply for PSLF, you also apply for TEPSLF.
Qualifying under the limited waiver is slightly more complicated for some borrowers. If you have previously applied for PSLF, the Department of Education will automatically review your account to see if you qualify for additional credit under the limited waiver. Thus, for most borrowers, no additional step is necessary.
However, if you have FFEL or Perkins loans, you must consolidate your loans by October 31, 2022. If you don’t consolidate, you can’t take advantage of the limited waiver.
Finally, if you work in a public service job, but you’ve never completed a PSLF application or employer certification, it is critical to get that form filed as soon as possible.
Which is Better: TEPSLF or the Limited Waiver
Both programs attempt to resolve the same issue. However, there are some key differences that make one program far more useful than the other.
The Limited Waiver will help far more borrowers due to several important factors:
- The Limited Waiver helps borrowers who signed up for the wrong repayment plan and it helps some borrowers with ineligible loans. TEPSLF only helps people with repayment plan selection issues.
- The Limited Waiver awards partial credit. Under the limited waiver, the Department of Education reviews previous applications and updates PSLF payment counts accordingly. Some people qualify for forgiveness right away, while others are moved slightly closer to the required 120 certified payments.
- TEPSLF is all or nothing. Either your entire loan balance is forgiven under TEPSLF, or you don’t benefit from the program at all.
- There isn’t a cap on the total amount of forgiveness available under the limited waiver.
The latest Department of Education statistics support this assessment. As of April 2022, over 112,000 borrowers have had more than $7 billion worth of federal loans forgiven under the limited waiver. TEPSLF helped just over 6,000 borrowers get $283 million forgiven so far.
However, there is one remaining advantage to TEPSLF. Based upon the amount of funding set aside, TEPSLF will be available to borrowers long after the limited waiver has expired.