One-Time Government Waivers for Student Loans: How They Work

Last year, the U.S. Department of Education announced two one-time government waivers to help federal student loan borrowers with Direct Loans qualify for loan forgiveness under the Public Service Loan Forgiveness (PSLF) Program and get credit toward Income-Driven Repayment Plan forgiveness.

When they were announced, the Biden administration estimated that the Limited PSLF Waiver and the IDR Waiver would provide immediate debt relief to tens of thousands of Americans and push millions more several years closer to cancellation.

Previously, borrowers with loans from the Federal Family Education Loan (FFEL) and Federal Perkins Loan Programs could not receive retroactive credit toward forgiveness.

But during the pandemic, the Education Department took a fresh look at its powers and realized that the HEROES Act of 2003 allowed the secretary of education to waive certain Federal Student Aid program rules in periods of national emergency.

Although eligibility for these waivers is open to all, those with privately-held federal student loan debt must consolidate into a Direct Consolidation Loan by the end of 2023 to receive the maximum number of qualifying payments toward their chosen forgiveness program.

For years, government and nonprofit full-time employees struggled to reach the loan forgiveness they deserved after a decade of public service work due to the complex eligibility requirements of the PSLF program. Some faced issues with loan types, others with repayment plans, and some had their forms rejected for minor errors.

Congress tried to fix the issue by passing the Temporary Expanded Public Service Loan Forgiveness Program. But TEPSLF only helped borrowers get credit for past payments made toward Federal Direct Loans, leaving those who paid toward other loans locked out of the relief.

In his first year, President Joe Biden simplified the rules, opening the door for swarms of people who had worked for qualifying employers to submit new PSLF Forms and access the promised relief.

Since then, the Education Department has eliminated loan balances for over 360 thousand people who once held a public service job, totaling over $24 billion in federal student loan debt, according to data from FSA.

Even though the gates to the Limited PSLF Waiver shut last Halloween, the numbers will climb.

MOHELA, the student loan servicer responsible for overseeing the program, is persistently navigating the flood of employment certification forms it received over the past two years, releasing updates every two weeks.

The federal government’s one-time account adjustment aims to eliminate over $400 billion in loans for its 43 million student loan borrowers.

Last year, the IDR Waiver was announced alongside the president’s extension of the payment pause. But it was overshadowed by Biden’s student debt relief program, which pledged to forgive up to $20,000 in federal loans for Pell Grant recipients during their undergraduate studies.

As the legality of that plan is now in question, the spotlight has shifted to this remarkable debt cancellation opportunity.

Here’s the process:

The four types of income-driven repayment plans link monthly payments to income and family size, promising to clear any remaining balance after 20 to 25 years.

Despite being available for over two decades, many remain unaware of this benefit.

Worse, loan servicers like Navient often steered borrowers into forbearances and deferments rather than income-driven repayment plans during financial struggles, causing them to miss out on forgiveness credit.

The waiver rectifies these injustices by increasing borrowers’ payment counts whenever their loan was in repayment, regardless of actual payments made or the repayment plan used. It also grants credit for time in long forbearances and some deferments before 2013 (excluding in-school deferment).

All Direct Loan Program loans will receive extra credit, including Parent PLUS Loans. But FFEL and Perkins Loans borrowers must submit a consolidation application by year-end to qualify.

You can apply for loan consolidation on StudentAid.gov.

The one-time government waivers have helped hundreds of thousands of federal student loan borrowers eliminate the full amount they owed. As the Education Department continues to apply the waivers, millions more will experience this financial freedom.

If you’re uncertain about your eligibility for the one-time account adjustment, don’t hesitate to reach out. Schedule a call with me, and together we’ll swiftly identify the steps to get your loans forgiven.

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