Learn About the One-Time Adjustment for Public Service Loan Forgiveness (PSLF)

Did you miss the Oct. 31. 2022 deadline for the Limited PSLF Waiver? Don’t worry—if you’re still employed in public service, it’s not too late!

The Public Service Loan Forgiveness (PSLF) Program forgives the remaining balance on your federal Direct Loans after you have made 120 qualifying payments while working full-time for a qualifying employer.

Last year, the U.S. Department of Education announced a historic temporary waiver to the PSLF Program’s rules. The waiver, called the “Limited PSLF Waiver,” allowed borrowers to get credit towards loan forgiveness for past repayment periods that would not otherwise qualify for PSLF. This helped many borrowers get loan forgiveness or get closer to loan forgiveness. Although the Limited PSLF Waiver ended on Oct. 31, 2022, there is good news!  With a few exceptions, the Limited PSLF Waiver is largely continuing through a new program, called the One-Time Adjustment.  However, to qualify for the One-Time Adjustment and maximize its benefits, you may need to apply to consolidate your federal loans by May 1, 2023

What is Public Service Loan Forgiveness (PSLF)?

The PSLF Program was created by Congress in 2007. It was intended to provide debt relief to federal loan borrowers who work for at least ten years in public service. Under PSLF, borrowers can receive forgiveness of their remaining federal loan balance after making ten years (120 months) of qualifying payments while working full time for the government or certain types of non-profit employers. However, the traditional PSLF rules are complex. For payments to count towards forgiveness they must be made:

  • on a Direct Loan,
  • under an income-driven plan or the 10-year standard plan,
  • for the full amount due as shown on your bill,
  • not later than 15 days after your due date, and
  • while you are employed full-time by a qualifying employer.

Due to these complex rules and poor administration, millions of public service workers were unable to access loan forgiveness—often because they had the wrong loan type or made payments under a non-qualifying repayment plan. The Limited PSLF Waiver and One-Time Adjustment were created to fix this problem.

What does the One-Time Adjustment do? 

While (1) qualifying employment is required and (2) borrowers must either have or obtain Direct Loans through consolidation, the One-Time Adjustment temporarily eliminates most of the PSLF Program’s other rules. Through the Adjustment, some borrowers will receive loan forgiveness while others will get much closer to forgiveness. To summarize:

  • Non-qualifying payments will now count. Months in which you failed to make a payment, paid late, paid the wrong amount, paid under the wrong repayment plan, or paid on a loan that was later consolidated will count towards forgiveness under the Adjustment. 
  • Payments on non-qualifying loan types can now count. Months in which you made payments on loan types that do not traditionally qualify for PSLF (e.g., FFEL or Perkins Loans) can count towards forgiveness under the Adjustment. However, you must apply to consolidate those loans into the Direct Loan Program by May 1, 2023.
    • Although consolidating restarts the clock on loan forgiveness under traditional PSLF rules, payments made prior to consolidation will count towards forgiveness under the One-Time Adjustment.
  • If payments were paused on your Direct Loans due to the COVID-19 emergencythose months will also count towards loan forgiveness under the Adjustment.
  • Forbearance periods of 12 or more consecutive months, or 36 or more cumulative months will count towards forgiveness under the Adjustment.
  • Months spent in certain types of deferment before 2013 (except in-school deferment) will count towards forgiveness under the Adjustment. Additionally, periods of Economic Hardship Deferment that occurred in or after 2013 will count.
  • Periods of deferment and forbearance for specific military service will count towards forgiveness under the Adjustment.

 

How is the One-Time Adjustment Different from the Limited PSLF Waiver?

For the most part, the PSLF Limited Waiver, which ended on Oct. 31, 2022, and the One-Time Adjustment are very similar.  However, there are two differences:

  • If you are retired or no longer working for a qualifying employer, you cannot receive forgiveness through the Adjustment. 
  • If you previously received Teacher Loan Forgiveness, the Adjustment will not give you credit toward PSLF for that period of service.

What Steps Do I Need to Take? 

Below are instructions and tips for ensuring that you obtain and maximize potential benefits under the One-Time Adjustment. If you need to apply to consolidate, you must do so by May 1, 2023. You can also learn more about the Adjustment and find answers to frequently asked questions on the U.S. Department of Education’s website.

Table of Contents

1. Confirm that you have qualifying full-time employment.

For your employment to count towards PSLF you need to work full-time for a qualifying employer.

Part-time employment will also count if you work a combined average of at least 30 hours per week for two or more qualifying employers at the same time.

What is a qualifying employer? A qualifying employer includes the government (federal, state, local, tribal), a nonprofit organization that is tax-exempt under Section 501(c)(3) of the Internal Revenue Code, or a nonprofit organization that provides certain types of public services. 

You can verify that your employer qualifies for PSLF by using the U.S. Department of Education’s PSLF Employer Search Tool. If the Search Tool doesn’t find your employer, it might be because no one with your employer has applied for PSLF before. It is still possible that the employment qualifies for PSLF. You can learn more about the requirements for qualifying employment on the U.S. Department of Education’s website

What does full-time mean?  You must work at least 30 hours per week or the number of hours your employer considers full-time, whichever is greater. For example, if you worked 32 hours per week but your employer considered 40 hours per week to be full-time, your employment will not qualify. However, borrowers who had more than one qualifying part-time job at the same time can meet the full-time requirement if they worked a combined average of at least 30 hours per week.  

2. Identify your federal loan types to see if you need to consolidate.

Borrowers can have several different types of federal loans, including Direct Loans, Federal Family Education Loans (FFELs), and Perkins Loans.  Some federal loans are even owned by private companies or schools. To qualify for the One-Time Adjustment, borrowers with federal loan types that are not Direct Loans (e.g., FFELs or Perkins Loans) must apply to consolidate those loans into the Direct Loan Program by May 1, 2023. 

  • Parent PLUS Loans are not directly eligible for the One-Time Adjustment for PSLF purposes. However, Parent PLUS Loans that were previously consolidated into a Direct Consolidation Loan will receive credit for repayment periods after the consolidation. Additionally, if Parent PLUS Loans are or were consolidated with student loans that the parent took out for their own education, the entire resulting Direct Consolidation Loan can receive credit under the Adjustment based on the parent’s student loans

WARNING: Be Careful of Mixing Federal Loans Owned by Private Companies or Colleges with Loans Owned by the U.S. Department of Education in a Consolidation: As stated, you must consolidate any non-Direct Loans into the Direct Loan Program for them to benefit from the One-Time Adjustment.  However, if some of your federal loans are owned by private companies or colleges and others are owned by the U.S. Department of Education, do not consolidate your U.S. Department of Education-owned loans with privately owned or school-owned loans if you want your U.S. Department of Education-owned loans to remain eligible to receive the $10,000-$20,000 in One-Time Student Loan Debt Relief.   To find out if some or all of your loans are owned by the U.S. Department of Education or a private lender, read these instructions or call the Federal Student Aid Information Center at 1-800-433-3243.

Here’s how to see whether your loans are Direct Loans, FFELs, or Perkins Loans:

 Student Aid view details
  • Scroll down the page to the section entitled "Loan Types." In the “Loan Types” section, you will see different categories of loans as shown below.
Pie chart of different loan types
  • Click on each loan category to see all your loans within the category. In the below example, there are two loans with outstanding balances. One is a Direct Loan, but the other is a FFEL Program Loan. The FFEL Program loan will need to be consolidated. You will need to carefully review each loan category to see if it contains loan types other than Direct Loans.
Breakdown of loan types

Please note that private loans are not eligible for PSLF or the One-Time Adjustment. Private loans will not appear in your studentaid.gov account.

3. Consolidate any non-Direct Loans into the Direct Loan Program.

If you have any federal loans that are not Direct Loans (e.g., FFEL or Perkins Loans), you must apply to consolidate those loans into the Direct Loan Program by May 1, 2023.

WARNING: Be Careful of Mixing Federal Loans Owned by Private Companies or Colleges with Loans Owned by the U.S. Department of Education in a Consolidation: As stated, you must consolidate any non-Direct Loans into the Direct Loan Program for them to benefit from the One-Time Adjustment.  However, if some of your federal loans are owned by private companies or colleges and others are owned by the U.S. Department of Education, do not consolidate your U.S. Department of Education-owned loans with privately owned or school-owned loans if you want your U.S. Department of Education-owned loans to remain eligible to receive the $10,000-$20,000 in One-Time Student Loan Debt Relief.  

To find out if some or all of your loans are owned by the U.S. Department of Education or a private lender, read these instructions or call the Federal Student Aid Information Center at 1-800-433-3243.

How to consolidate. You can apply for a Direct Consolidation Loan from the U.S. Department of Education’s consolidation website in one of two ways: 

Choosing a servicer. Choose MOHELA, the newly appointed PSLF servicer. If you apply to consolidate online, check the box indicating you are pursuing PSLF and choose MOHELA from the servicer selection drop down menu. If you are mailing in a paper consolidation application, you can send your completed application to MOHELA at the following address:

MOHELA
c/o Aidvantage LCP - E1140
PO Box 8008
Fishers, IN 46038-8008

Please note that although you have chosen MOHELA, the initial processing will be handled by Aidvantage, which is another federal loan servicer. During this initial process, you will work with and receive communications from Aidvantage.

Choosing a repayment plan.  In connection with your consolidation application, you will need to choose a repayment plan for your new Direct Consolidation Loan. If you apply to consolidate online, you will be asked to choose a repayment plan as part of your consolidation application.

If you use the paper consolidation application, you will need to download and submit the Repayment Plan Request form or the Income-Driven Repayment Plan Request form. After downloading, printing, and completing the relevant form, mail the request form to MOHELA. If you are submitting an Income-Driven Repayment Plan Request form, you will also need to include the income documentation described on page 5 of the form.    

To continue earing credit toward PSLF once the One-Time Adjustment is completed in July 2023, most borrowers will need to enroll in an income-driven repayment plan. Since it typically takes several billing cycles to enroll, you should get started in May 2023.  For more information on this topic, please read Section 7 below.

Questions about consolidation.  You can call the Federal Aid Information Center at 1-800-433-3243 if you have questions about how to consolidate.

4. If you have Direct Loans, find out if consolidating could help some loans get forgiven sooner.

Even if some or all of your loans are Direct Loans, below are two scenarios in which consolidating your existing loans into a single Direct Consolidation Loan could help you get forgiveness faster.

However, keep in mind that if you made more than 120 qualifying payments on an existing Direct Loan, consolidating that loan will disqualify you for any potential refund of the payments you made on that loan beyond the 120 required for forgiveness.

Additionally, after September 28, 2022, mixing federal loans owned by the U.S. Department of Education with federal loans owned by private lenders or schools in a single consolidation will disqualify the resulting Direct Consolidation Loan for the $10,000-$20,000 in One-Time Student Loan Debt Relief.

  • If some of your loans have been in repayment longer than others, consolidating may help you get forgiveness faster on your more recent loans.  Direct Consolidation Loans will be credited with the largest number of qualifying months among the loans that were consolidated. So, if some of your loans have been in repayment longer than others (e.g., you worked full-time for a qualifying employer between undergraduate and graduate studies), forgiveness will come faster on your more recent loans if you consolidate them with your older loans. The entire new Direct Consolidation Loan will receive the credits associated with the underlying loan that had the largest number of qualifying months.
    • For example, if you had 50 qualifying months on one federal loan and 100 qualifying months on another, and you consolidate the two loans, the new Direct Consolidation Loan will receive 100 qualifying months towards loan forgiveness under the Adjustment.
  • If you have Parent PLUS Loans and your own student loans, consolidating may help your Parent PLUS Loans get forgiven sooner.  Parent PLUS Loans are not directly eligible to receive PSLF credits through the One-Time Adjustment. However, by consolidating your Parent PLUS Loans with loans taken out for your own education, the resulting Direct Consolidation Loan will receive PSLF credits under the Adjustment based on your student loans
  • For example, a borrower was in repayment on a Parent PLUS Loan from January 2012 through December 2015 and their own student loan from January 2010 through December 2015. The borrower consolidated the two loans in December 2015. While the Adjustment will not consider the repayment history on the Parent PLUS Loan, the repayment history on the parent’s own student loan will count, and the entire Direct Consolidation Loan made in December 2015 will receive credits towards loan forgiveness for January 2010 through December 2015

However, by consolidating your Parent PLUS Loans with your own student loans, the resulting Direct Consolidation Loan will be restricted to the Income-Contingent Repayment (ICR) plan, which may require higher monthly payments and offer less favorable terms than other Income-Driven Repayment Plans available for your federal student loans.

5. Ensure your employment certifications are up to date.

If you do not have approved employment certifications on file for all your qualifying employment periods since the October 1, 2007 start date of the PSLF Program, you must file a PSLF Form to certify your employment for each uncertified periodYou should file a PSLF Form for any period you are unsure about. We recommend filing by July 1, 2023, though you can do so later if need be. 

How to fill out the PSLF Form. You can fill out the PSLF Form in one of two ways:

  • You can use the PSLF Help Tool to assist you in starting the PSLF Form. Once you enter your information, you’ll be able to print the partially completed form for you and your employer to sign.  
  • Or, you can download the PSLF Form and you and your employer can complete all sections before you submit it.

Typically, your employer’s human resources department will help complete the PSLF Form and sign it on behalf of your employer.  

Accepted Signature Types. To be accepted, digital signatures from you and your employer must be hand-drawn (e.g., from a signature pad, mouse, finger, or by taking a picture of a signature drawn on a piece of paper that you then scan and embed on the signature line of the PSLF Form). Typed signatures, even if made to mimic a hand-drawn signature, or security certificate-based signatures are not accepted.

Where to send the completed PSLF Form. After filling out the PSLF Form and obtaining your employer’s signature, you can mail or fax it to MOHELA, the federal loan servicer appointed by the U.S. Department of Education to administer the PSLF Program. If MOHELA is already your servicer, you may upload your PSLF Form on MOHELA's website

Mailing Address:          

U.S. Department of Education
MOHELA
633 Spirit Drive
Chesterfield, MO 63005-1243

Fax Number: 1-866-222-7060

6. If you were steered into forbearance, complain to the U.S. Department of Education.

To address the harm that federal loan servicers caused by inappropriately steering borrowers into long-term forbearances, the U.S. Department of Education announced that it will conduct a one-time account adjustment later this fall that will count forbearance periods of more than 12 consecutive months or more than 36 cumulative months towards forgiveness under PSLF. However, borrowers who believe they were steered or forced into shorter-term forbearances can seek account reviews and credit towards PSLF by filing a complaint with the Federal Student Aid Ombudsman at StudentAid.gov/feedback.

7. Prepare to pay under traditional PSLF (or maybe TEPSLF) rules in July 2023.

Through the One-Time Adjustment, some public service workers will reach 120 qualifying payments and be able to receive loan forgiveness in July 2023. Others will receive an increase in their qualifying payment count but will need to continue working towards loan forgiveness after the One-Time Adjustment is completed in July 2023. These borrowers must start paying under traditional PSLF rules in July 2023including paying under an income-driven plan or a standard 10-year plan. (Please note, that the “standard plan” for Direct Consolidation Loans does not qualify under the traditional PSLF Rules.)

Traditional PSLF rules. For payments to qualify towards forgiveness under the traditional PSLF rules, they must be made on a Direct Loan:

  • under an income-driven plan or the 10-year standard plan,
  • for the full amount due as shown on your bill,
  • not later than 15 days after your due date, and
  • while you are employed full-time by a qualifying employer.

The following repayment plans do not qualify under the traditional PSLF rules:

  • standard repayment plans for Direct Consolidation Loans,
  • graduated repayment plans,
  • extended repayment plans, or
  • alternative repayment plans.

To learn about all of the traditional PSLF rules, please visit the U.S. Department of Education’s website.

Be prepared repayment plans that qualify under the traditional PSLF rules may result in higher payments. Borrowers may find that repayment plans that qualify under the traditional PSLF rules, including income-driven plans, result in higher payments. In such cases, borrowers should weigh the cost of making the higher payments for the number of months it will take to receive loan forgiveness against the cost of repaying their loans in full over time with interest (often over a 25- or 30-year period). Keep in mind that the U.S. Department of Education intends to create a new less expensive income-driven repayment plan in 2023.

  • You can use the U.S. Department of Education’s Loan Simulator to find out what your payments would be under existing income-driven plans. 

Payments may be lower under repayment plans eligible for Temporary Expanded Public Service Loan Forgiveness (TEPSLF) but counting on TEPSLF may be risky. The TEPSLF Program enables borrowers to potentially receive forgiveness based on payments made under repayment plans that don’t typically count towards PSLF, including:

  • standard repayment plans for Direct Consolidation Loans,
  • graduated repayment plans, and
  • extended repayment plans.

In some cases, TEPSLF-eligible repayment plans may offer lower payments than plans that qualify under the traditional PSLF rules. Borrowers who can’t afford the payments required under traditional PSLF rules and those who expect to be close to having 120 qualifying months towards forgiveness by the time the One-Time Adjustment is completed in July 2023 may wish to consider making payments under the TEPSLF Program starting in July 2023. However, it may be risky to rely on TEPSLF since it is a temporary program with limited funding. It is possible that TEPSLF will no longer exist by the time borrowers reach 120 qualifying payments. Were this to occur, payments made under TEPSLF-eligible repayment plans would not count towards loan forgiveness under PSLF.

TEPSLF has other rules too. While TEPSLF will count payments made under certain repayment plans that don’t traditionally qualify for PSLF, all of the other traditional PSLF rules apply to TEPSLF (e.g., only Direct Loans are eligible, and payments must be made in full and on time). Also, to receive forgiveness under TEPSLF, borrowers must pay at least certain amounts in two particular months. Specifically, the payment made 12 months before applying for TEPSLF and the last payment made before applying for TEPSLF must equal or exceed the amount the borrower would have been required to pay under an income-driven plan. This is an important hurdle that borrowers should be aware of and plan for if they intend to pursue TEPSLF. You can learn more about TEPSLF’s rules on the U.S. Department of Education’s website.

8. Avoid scams.

Student loan “debt relief” companies charge fees for helping federal student loan borrowers to enroll in income-driven repayment plans, consolidate loans, or get out of default. There is nothing these companies can do for you that you can’t do on your own for free!

Some of these companies are trying to take advantage of circumstances related to the pandemic and government relief packages. If someone contacts you asking for your personal information or for money to help you pursue loan forgiveness—it’s a scam.  Scammers may also claim you are eligible for immediate loan forgiveness through “Biden Loan Forgiveness” or “CARES Act Loan Forgiveness.” You can learn more about the other warning signs of a debt relief scam on the U.S. Department of Education's Website.

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