(GEN-21-09) Guidance for FFEL and Perkins Loan Program Participants on the Limited Public Service Loan Forgiveness Waiver

On Oct. 6, 2021, the Department announced a set of improvements to the PSLF Program, including waivers of certain program requirements, which will be available to borrowers over the next year. The necessary waivers are authorized by the HEROES Act in 20 U.S.C. §1098bb to benefit student loan borrowers, particularly the public service workers who have been affected by the COVID-19 pandemic.  Please note that not all provisions of the announcement reflect temporary waivers of program requirements; some are permanent operational improvements that FSA will implement over the course of the coming months. This letter only addresses the portion of the announcement related to the time-limited waivers. Any reference to PSLF in this Dear Colleague Letter also includes the Temporary Expanded PSLF (TEPSLF) Program.

We have named this waiver the limited PSLF waiver and established a borrower-facing information page that we will keep updated with information as it becomes available. Below, please find information about our expectations for FFEL and Perkins Loan program participants as they seek to support borrowers navigating the limited PSLF waiver.

The waiver operates as follows:

It is important to note that, while PSLF is a program that provides forgiveness after making 120 qualifying payments, the waiver provides credit to borrowers toward the 120 qualifying payment requirement for periods of time in which their loans are reported as being in a “repayment status” to the National Student Loan Data System (NSLDS), without regard to whether a payment was actually made, when it was made, or what repayment plan the borrower was in at the time. This means that borrowers who are in a deferment or forbearance status will not receive credit toward the 120 qualifying payments requirement as a part of the Department’s implementation of the waiver. The Department will later work toward implementing the provisions of the waiver related to active-duty military borrowers, who may qualify for credit toward PSLF during specific periods of deferment or forbearance.

For current FFEL and Perkins Loan borrowers to take advantage of the opportunity provided by this waiver, they must do two things:

For borrowers who consolidate their loans or submit a consolidation loan application by October 31, 2022, the Department will provide credit toward PSLF for any month the borrower was in qualifying employment and was in repayment on the loans they consolidated, even if not all their loans were in repayment during a given month. For example, if a borrower was in repayment on a FFEL Subsidized Stafford Loan from January 2013 through December 2021 but was in repayment on a Federal Perkins Loan from February 2012 through December 2013, the borrower would receive credit on the Direct Consolidation Loan for the entire period of February 2012 through December 2021. As usual, for a payment to fully qualify for PSLF, an approved employment certification must be on file for each month under consideration.

Parent PLUS Loans are not eligible for this credit directly; however, if a borrower has a mix of Parent PLUS Loans and loans they received as a student, the period the borrower was in repayment on the loans they received as a student will be considered as months of qualifying payments on the Direct Consolidation Loan.

As always, the Department expects FFEL and Perkins Loan program participants to provide complete, timely, and accurate information about the terms and benefits of Title IV loans, as well as provide the steps a borrower needs to take to access those benefits. The Department additionally expects FFEL and Perkins Loan program participants to assist borrowers with assessing whether they are meeting specific program requirements, or what actions borrowers need to take to ensure they receive the maximum benefit to which they are entitled under the Title IV programs. The Department will be working with its enforcement partners on a joint approach to evaluating whether FFEL and Perkins Loan program participants are meeting such obligations.

Interactions with borrowers must not be unfair, deceptive, abusive, or misleading. The Department has provided copies of this Dear Colleague Letter to the Consumer Financial Protection Bureau, state Attorneys General, and state banking regulators to ensure they are familiar with this guidance about implementation of the limited PSLF waiver and are able to assist the Department in ensuring compliance with applicable laws. The Department may view statements by a lender or servicer that it cannot help the borrower with respect to the limited PSLF waiver to be false or misleading.

We expect that if a borrower contacts a lender, guaranty agency, or servicer and states, says, suggests, or implies that they are working toward PSLF or TEPSLF, have worked in public service, or are interested in PSLF, TEPSLF, or the limited PSLF waiver, that they will be told the following with respect to their FFEL Program or Federal Perkins Loans:

The consolidation of loans required to take advantage of the limited PSLF waiver may have implications for the interest rate and borrower benefits for some borrowers. While these benefits are important for borrowers, they will likely be far less valuable than obtaining loan forgiveness under PSLF for qualifying borrowers.

In discussing the relative tradeoffs of consolidation with a borrower, lenders and servicers should provide information on an individual basis based on that borrower’s circumstances. Blanket assertions that consolidation would result in a higher interest rate or loss of borrower benefits may be considered a misrepresentation. Further, consistent with the Department’s longstanding policy on this matter, the Direct Consolidation Loan Verification Certificate directs FFEL program participants who are certifying a loan selected for consolidation to report the interest rate that is legally in effect on the loan as of the date of certification, including any interest rate modifications that have been applied to the loan by the lender.  As always, these certificates must accurately reflect borrowers’ interest rates. For example, if the FFEL lender has provided the borrower with a 1 percentage point reduction in the interest rate after the borrower made 2 years of on-time payments, the reduced interest rate that was applied to the borrower’s account is the interest rate that must be certified by the lender when the borrower consolidates, not the maximum statutory rate that a lender could have charged under the Act but for the interest rate or other reductions.

At all times, we expect FFEL and Perkins Program participants to point borrowers seeking information about PSLF, TEPSLF, or the limited PSLF waiver, to resources put out by Federal Student Aid or the Department. The resources currently available are below:

You may also refer borrowers to 1-800-4-FEDAID if they have additional questions about the limited PSLF waiver. However, when doing so, please inform borrowers that this call center is not equipped to inform the borrower about how the waiver will or will not affect them individually.

As a resource, we are attaching to this Dear Colleague Letter a copy of the talking points that we provided to our own contact centers in late October, and that we strongly encourage FFEL Program participants to use as they speak to borrowers about the waiver unless this Dear Colleague Letter provides more specific guidance to FFEL and Perkins Loan program participants.

Richard Cordray
Chief Operating Officer
Federal Student Aid

The U.S. Department of Education (Department) strives to make all content accessible to everyone. While this document does not currently meet the standards of Section 508 of the Rehabilitation Act of 1973, as amended, an accessible version will be forthcoming. If you want to be notified when the accessible version is available, please contact the Department's Information Technology Accessibility Program Manager, Denise McGland, at Denise.McGland@ed.gov.

Talking Points for Contact Centers About PSLF Waiver in PDF Format, 6 Pages, 237KB