(NerdWallet) – Beth Bourdon, an assistant public defender at the Orange County Public Defender’s Office in Orlando, Florida, was used to her student loans not qualifying for relief that other federal loans did.
She had Family Federal Education Loan Program, or FFEL, loans. They’re an older type of federal student loan that may be owned by the federal government or a private company. This type of loan generally doesn’t qualify for the benefits that come with federal direct loans. Those benefits include income-driven repayment, loan forgiveness or, most recently, the federal student loan payment pause.
“When everyone else’s student loan payments were paused for COVID, mine weren’t paused. I paid every month,” says Bourdon. “When everyone else’s interest rate dropped down to zero, mine didn’t drop down.”
She finally caught a break with the help of a temporary waiver for the Public Service Loan Forgiveness program. The waiver, which includes FFEL loans, counts past payments toward the total needed for debt discharge that otherwise would have been ineligible.
Through the waiver, Bourdon saw her remaining $57,000 in law school debt wiped away.
A debt discharge program with a dismal success rate
For years, most borrowers who applied for Public Service Loan Forgiveness were rejected. The approval rate since the program’s inception in 2007 hovered around 2.4%.
Full debt discharge requires 120 qualifying payments made while working full time for an eligible employer such as a public school, public hospital, qualified nonprofit or the government. But most borrowers had floundered, sometimes for years, in their attempts to advocate for payments to be counted toward forgiveness.
As a result of public criticism, the Biden administration made temporary changes to rectify some of the flaws in the program’s execution. Hence, the PSLF waiver, which offers borrowers the opportunity to receive credit for past payments that didn’t meet the program’s stringent rules. Since the waiver was implemented in October 2021, federal data shows PSLF approvals through June 2022 have climbed to nearly 10%.
A short window of forgiveness
Bourdon had about $75,000 in student loans, including $20,000 in undergraduate debt she used to attend the University of Central Florida. She’d already repaid her undergraduate debt when she learned about the PSLF waiver. That left only her law school debt — originally about $55,000 — which she had held since 2004 when she earned her Juris Doctor degree at Stetson University College of Law in Gulfport, Florida.
Bourdon says she posted on Twitter last fall about how she didn’t qualify for forgiveness due to the type of federal loans she carried. In response, she received a direct message about the waiver from a member of the Debt Collective, a membership-based debtors’ union and advocacy nonprofit. Finding out that she might see her debt erased prompted her to apply, though not without some apprehension.
“I was really scared that I was going to screw something up,” says Bourdon. “But I told myself ‘This is the only chance I have and it’s only an open window for a year.’ I didn’t know how long the process was going to take.”
She doesn’t recommend applying for PSLF while also working a first-degree murder trial in a different county, as she did. But, the more typical aspect of her application process went like this:
First, Bourdon used the federal government’s employer search tool for PSLF, a database of all employers that qualify for the benefit. But the PSLF help tool proved to be finicky and less user-friendly to Bourdon, so she abandoned it.
Next, Bourdon applied for consolidation, a necessary step for borrowers who don’t have direct loans. However, she says she was afraid of consolidating her debt due to the stringent rules of Public Service Loan Forgiveness and income-driven repayment forgiveness — if you consolidate, your countdown to forgiveness resets as zero.
Bourdon took the plunge in good faith. In the process, she chose to have her loans serviced by the only student loan servicer that manages debt for borrowers seeking PSLF (at the time, it was FedLoan Servicing, but those loans are in the process of moving to MOHELA by year’s end).
Finally, she submitted the combined PSLF/Employer Certification Form. She initially had two separate waiver forms because of a break in employment. But the human resources department at her employer sent back a single form and told her even if she had split periods of work, the federal student aid office would process it on one form.
This turned out to be a mistake.
Bourdon submitted the single application in November 2021. However, by early January 2022, she received a letter that stated she only had one qualifying payment according to the waiver and still had to make 119 more payments.
“I started freaking out,” Bourdon says. She received advice from the Debt Collective to submit two forms to certify her employment that accurately showed the separate periods of public service employment in her history.
Then, she waited and checked her account every single day.
“Nothing seemed to be changing. I was getting antsy,” says Bourdon. Then she saw an anticlimactic $1,000 decline in her total balance. “It was like, ‘Oh, thanks a lot,'” she says.
On Feb. 15, Bourdon logged in to her account and saw her debt was at zero. But, instead of instant relief, she says she was filled with doubt.
“For a second, I was like, ‘this is a trick,'” says Bourdon.
But two days later, she had a message in her account, a letter from her servicer confirming the discharge of her debt.
How to get the PSLF waiver
More than 146,000 borrowers have seen a collective $9 billion in loan debt forgiven through the temporary waiver, federal data from June shows. The average balance discharged through the waiver is $61,408. If your employer qualifies you for PSLF, you should apply even if past payments have been denied.
The PSLF waiver counts past payments that previously didn’t qualify including:
- Late payments.
- Payments equaling less than the full amount due.
- Payments made on the incorrect repayment plan.
- Payments made on loans that previously did not qualify, such as FFEL loans or Perkins loans.
- Payments not made during forbearance periods of 12 consecutive months or greater.
- Months spent in deferment, other than in-school deferment, before 2013.
Use the PSLF Help Tool to search for a qualifying employer and generate a form. It has been updated to align with the waiver.
To qualify, borrowers must already have direct loans or consolidate their federal debt into a new direct loan. The consolidation step is critical: Borrowers can submit a combined PSLF/Employer Certification form before consolidating, but they must consolidate to be eligible for forgiveness.
To find out if you qualify for additional payments and learn more about the waiver, log in to the federal student aid website. Make sure to submit it before the waiver expires on Oct. 31.