As borrowers prepare for the restart of student loan repayment, many temporary programs are winding down and key deadlines need to be understood.
The expanded utility loan waiver and limited utility loan waiver may sound similar, but these two very different programs have different rules and timelines. For borrowers who aren’t looking for the PSLF, there’s a one-time upgrade that could help them qualify for a discount years earlier.
This article aims to help borrowers sort through the various relief programs and ensure no deadlines are missed.
The waiver limited to the deadline for the remission of public service loans
We will eliminate the bad news first. The deadline to take advantage of the limited waiver was October 31, 2022.
The limited derogation on PSLF was created to help borrowers qualify for the PSLF even if they enrolled in the wrong repayment plan or had loan eligibility issues.
Since the Limited Wavier was created using temporary legislative authority, this program is unlikely to restart.
However, the good news is that the expanded public service loan temporary relief is still in effect and may help many PSLF borrowers who may have missed the limited relief.
Exemption from extended public service loans
The TEPSLF program was created by Congress when it became apparent that the rejection rate for PSLF applications was far too high. At the time, reports showed that over 99% of borrowers were rejected.
The TEPSLF allows borrowers to qualify for the PSLF even if they were on the wrong federal repayment plan. For example, this program helps borrowers who have enrolled in extended or graduated repayment plans and who hope to qualify for the PSLF.
Although the TEPSLF program is temporary, it does not end on a fixed date. In place, 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 cannot benefit from the program until you have reached 120 payments towards PSLF. In other words, you can’t immediately fix it if you’ve 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: Both the TEPSLF program and the limited waiver were created to solve the same problem. Not surprisingly, they overlap in different ways. However, there are several key differences between the programs that borrowers should understand.
The one-time update of the number of IDR payments
Over the years, managers have steered many borrowers toward deferrals or forbearances when the borrower would have been better off on an income-contingent repayment (IDR) plan.
To correct this problem, the Biden administration is conduct a one-time review of borrowers’ repayment history and extend credit for months that previously would not have counted. In addition to helping borrowers with deferrals and forbearances, the program will help borrowers who were enrolled in balance-based repayment plans such as standard or graduated repayment plans.
There is no deadline for most borrowers to take advantage of this program, as it happens automatically. However, if you have FFEL loans or Perkins or HEAL loans held by business enterprises, you will need to consolidate your loans into a Federal Direct Consolidation Loan. The deadline for borrowers to consolidate into a direct loan is May 1, 2023.
One-Time Student Loan Forgiveness Deadlines
Biden’s plan to forgive up to $20,000 per federal borrower is currently stalled in court. It is possible that the program does not take place at all; things may go as planned and there may be changes. We don’t know at this point.
For now, two important deadlines are in place. First, borrowers with FFEL loans held by companies had to consolidate before September 29, 2022 in order to benefit from the program. Unfortunately, this deadline was announced the day after it expired. This decision was unfair to FFEL borrowers, but it may have been necessary for the program to survive in court.
The deadline for all other borrowers is December 31, 2023. As previously stated, this timeframe is subject to change depending on the dispute, so this situation is worth watching closely. For now, the website to apply is closed due to a court order. If the court reverses the order and the claims resume, borrowers should apply as soon as possible to ensure they don’t miss out.
Federal Student Loan Payment and Interest Suspension
The exact date when the federal student loan payment and interest break ends is somewhat convoluted.
If the Supreme Court makes a final decision on the program — whether it’s good or bad for borrowers — repayment and interest resume 60 days later.
However, if the Supreme Court moves slowly, the payment break will end on June 30, 2023. At that time, borrowers will have at least 60 days before payments are due, and interest will be charged.