Extra Credit: New student-loan forgiveness guidelines explained: a step-by-step guide to taking advantage of the PSLF waiver

Hello and welcome back to MarketWatch’s Extra Credit column, a weekly look at the news through the lens of debt.

In this week’s column we want to help you navigate changes to the Public Service Loan Forgiveness program announced by the Department of Education earlier this week with a step-by-step guide. But first a little bit of background (scroll down if you’d prefer to skip to the guide). 

Over the past several years, we have written about the challenges nurses, teachers, social workers and other public servants have faced accessing the relief they were promised. In many cases, these borrowers only learned they weren’t eligible for relief — often due to a technicality — until after they’d spent years planning their financial lives around eventual forgiveness. 

How PSLF was supposed to work

That’s despite the relatively simple promise of the program, which was signed into law in 2007: Work in public service for 10 years, pay your student loans during that time and have the balance cancelled at the end of that period. 

As Secretary of Education Miguel Cardona put it this week in describing experiences he heard from borrowers earlier this year. “Just the hoops they had to jump through…it’s almost like the process was designed to get them to be frustrated,” Cardona said during a roundtable discussion with public servants. 

The Department’s announcement aims to help public servants get more monthly payments counted towards that 120 monthly payments needed for relief. “We’re going to really cast that wide net and bring those borrowers back in,” Cardona said.  

To do this, the Department is using a temporary waiver to allow monthly payments that previously weren’t eligible because borrowers had the wrong type of federal loan, the wrong type of repayment plan, or due to a payment technicality — for example, the payment came at the wrong time of the month or was off by a few pennies — to count towards the 120. 

By addressing the loan type and payment plan issue, the limited waiver will tackle two of the biggest obstacles public servants face accessing PSLF. 

Still, there are a few caveats to the announcement: Parent PLUS loans are not eligible for the waiver and it doesn’t expand the categories of employment that are eligible for the program (more on that below). In addition, borrowers need to be working full-time for a qualifying employer at the time of their payments in order for those payments to count. 

Big changes

Finally, unless you’re a military-connected student-loan borrower, periods of deferment and forbearance will not count towards the 120 payments necessary for relief under the limited waiver. As part of a collaborative rule-making process that kicked off this week, the Department is seeking suggestions for changes to PSLF long-term, including counting deferments and forbearances towards PSLF. 

Still, loan type and payment plan changes during this waiver period are good news for a lot of people — at least 550,000 the agency estimates. Even better, the Department will be making some adjustments automatically.

Nonetheless it’s easy to understand why many borrowers are skeptical. In the past getting forgiveness under PSLF has been notoriously challenging, sometimes requiring copious record keeping and several conversations with student loan companies — and even then still getting rejected. 

What’s more, the student loan system is currently in flux. Over the past year, four student-loan servicers, including FedLoan Servicing, the organization that has historically managed the PSLF program, announced they won’t be renewing their contracts with the Department. 

“One of the challenges of this program is people are rightly cynical because so many people have been denied,” said Eric Harrington, senior counsel at the National Education Association, a union representing educators. “I want to underscore how significant this is, how real it is.”  

In some cases to take advantage of the waiver, borrowers will need to take action. They’ll need to do so by Oct. 31, 2022.

Here is a step-by-step guide to accessing the relief:

Step 1: Make sure the Department of Education has your most up-to-date contact information

The Department of Education’s Office of Federal Student Aid will be reaching out to borrowers directly to let them know how they may be affected by the changes announced this week and in some cases, what steps they may need to take to benefit from the PSLF revamp. 

“Having up-to-date contact information is the best way for us to be able to do that,” a Department of Education official said on a conference call with reporters earlier this week.  

To do this, borrowers should register with the Office of Federal Student Aid by creating an FSA ID. To create an account, click here. If you already have an FSA I.D. make sure your contact information is up to date. To do that, first log into your FSA account and then go to 

Step 2: Check to see what kind of federal student loans you have

Historically, one of the most challenging aspects of navigating Public Service Loan Forgiveness is that only one type of federal student loan — a Direct Loan — is eligible. During the period of the waiver, borrowers who made payments on other types of federal student loans can have those payments count towards the 120 needed for relief. 

But in some cases, these borrowers will have to take action to get those payments counted. That’s why it’s important to find out which type (or types) of federal student loans you have. Don’t worry if you have no idea, it’s very common for borrowers not to know.

To figure it out, log in to your account at, go to the My Aid page, or, and go to the Loan Breakdown section, which provides a list of your federal student loans. 

Loans that start with the word “Direct” are Direct Loans. If all of your loans are Direct Loans — including because you previously consolidated other types of loans into the Direct Loan program — you can skip down to Step 5. 

If you have Family Federal Education Loans, which start with “FFEL” in the Loan Breakdown section, or Perkins Loans, which have the word “Perkins” in the name, proceed to step three.  

Step 3: Check if your current or previous employment is eligible for PSLF

If you’ve already had some of your employment certified for PSLF — that means that before November 2020 you submitted an employment certification form had it approved or after that date you submitted a PSLF form and had your employment approved — you can skip down to Step 4. 

This week’s announcement did not expand the categories of employment that are eligible for Public Service Loan Forgiveness. That means only payments made while you’re working for the government, a 501(c)(3) organization, or a non profit that provides a designated public service count towards the 120 needed for forgiveness. 

If you don’t work for the government or a 501(c)(3) and aren’t sure if your employer makes you eligible for PSLF and you have FFEL or Perkins Loans you may want to check whether your employer qualifies before you go to step four, which is to consolidate those loans into the Direct Loan program. That’s because consolidation can change certain features of your loan, like the interest rate, which may not be beneficial to you if you’re not working for an employer that’s eligible under PSLF. 

To check whether your employer qualifies, go to the PSLF Help Tool. There you can see which employers the Department of Education has already said are eligible for PSLF through a searchable database.  

If you retired or left the public sector and believe you once worked for a qualifying employer, it’s still worth checking if that employment is eligible. During the period covered by the limited waiver, borrowers who previously worked in public service and have since left those jobs can have any payments made while working at the eligible employer counted towards relief. 

Step 4: Consolidate FFEL or Perkins Loans into the Direct Loan program before October 31, 2022

In order for payments borrowers made previously on FFEL or Perkins loans to count towards the 120 needed for relief under the limited PSLF waiver, they first need to consolidate those loans into the Direct Loan program. 

Borrowers can consolidate their non-Direct Loans at any time and may want to start the process as soon as possible. In order to have previous payments on FFEL or Perkins loans count under the limited waiver borrowers need to consolidate their non-Direct Loans by Oct. 31, 2022. 

(If you previously consolidated your non-Direct Loans into the Direct Loan program, any payments you made on the loan before consolidation will count towards the 120 monthly payments required for relief under the waiver). 

To consolidate your loans go here. It’s free to consolidate your federal student loans and any company claiming to help you with the process for a fee has no affiliation with the Department of Education or its student loan servicers. 

You need to fill out the consolidation application in one session and it should take about 30 minutes. When you consolidate your loans you will be able to choose what type of repayment plan you will use to pay down the debt. To ensure your payments on the new Direct Loan count towards Public Service Loan Forgiveness going forward, you should select an income-driven repayment plan.       

Step 5: Submit a PSLF form before October 31, 2022

If you only have Direct Loans and you previously certified your employment for PSLF — that means that before November 2020 you submitted an employment certification form had it approved or after that date you submitted a PSLF form and had your employment approved — you can skip down to Step 6.

If you have only Direct Loans and never submitted a form certifying your employment, you should do so. By verifying your employment with the Department of Education, you’re indicating to the agency that you’re interested in and eligible for relief, which will signal to the Department to review your payment history to see if any of the payments you previously made on your loans count towards the 120 needed for forgiveness. If you’ve already certified some of your employment, but not all of it, you should verify the portion of your employment you haven’t yet certified.  

To certify your employment for the first time or to certify portions of your employment you haven’t verified already, go to the PSLF help tool. You can also fill out the PSLF form by hand and mail it in. For your payments to qualify under the waiver, you need to fill out the PSLF form by Oct. 31, 2022. 

If you just consolidated your FFEL or Perkins Loans into a Direct Loan, you need to submit a PSLF form — even if you previously certified your employment or applied for PSLF. Again, to do that you can visit the PSLF help tool (you can also fill out the form and mail it in). 

As we’re still at the beginning of the waiver window, you may want to wait until after your consolidation has been processed before completing the form to make it easier for the PSLF form to be processed, said Betsy Mayotte, the president of The Institute of Student Loan Advisors. Processing a consolidation usually takes about six to eight weeks. 

Again for your payments to qualify under the waiver, you need to fill out the PSLF form by Oct. 31, 2022. 

The processing time for a PSLF form varies, but the majority of borrowers can expect to know the results of their processing within two weeks of submitting the form, according to the Department. The agency recommends using the PSLF Help Tool for the speediest processing. 

Factors that could delay the processing of the form include: If some portion of your employment hasn’t already been certified as eligible and if your loans haven’t already been assigned to FedLoan Servicing.  The Department is expecting an influx of applications as a result of this week’s announcement, which may delay processing.

Step 6: Hang tight

It could take anywhere from a few weeks to several months to see your adjusted payment count reflected in your account information, according to a Department spokesperson. In other words, this process will require some patience.

But you can expect to hear from the Department about the changes and what they might mean for you before that. The communication will come via email, which is why it’s important to do step one and check your email spam filters. 

Federal Student Aid will start by contacting borrowers who previously submitted forms to certify their employment, are already assigned to FedLoan and previously consolidated their FFEL, Perkins Loan or Direct Loans into a direct consolidation loan before the agency’s announcement. FSA is planning to email these borrowers on or around Oct. 14 with information about their estimated increase in qualifying payments, according to a Department spokesperson. 

Next, the Department will email borrowers who only have Direct Loans — they never consolidated, — previously certified their employment and are assigned to FedLoan. FSA expects to email this group in November. The agency plans to email the remaining borrowers in December. 

Check out MarketWatch’s new podcast, “Best New Ideas in Money,” hosted by MarketWatch editor-in-chief Jeremy Olshan and economist Stephanie Kelton.

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