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Don’t let sloppy servicing keep you from benefitting under the PSLF Fix before it expires on October 31, 2022

For years, the CFPB has documented the problems that consumers faced due to shoddy student loan servicing, which knocked teachers, servicemembers, and other public service workers off track and kept them from getting the relief that the Public Service Loan Forgiveness (PSLF) program promised. In fact, it was a decade ago that the CFPB warned that servicer failure was adding unnecessary cost to servicemembers’ loans and keeping them from making progress toward loan forgiveness. And those problems continued: just a few months ago , we reported how servicers illegally misled consumers about their eligibility for PSLF, giving false statements about which loans and employers are eligible for the program.

After consumer complaints, law enforcement actions, and workers in public service sharing their experience of servicer breakdowns knocking their loans off track, the Department of Education announced that it would take sweeping action. In October of last year, it unveiled temporary changes to PSLF program rules called the PSLF Limited Waiver. Under the new rules, any past payment on a federal student loan by a borrower working in public service can count toward PSLF, regardless of repayment plan, loan type, or whether the payment was made in full or on-time. This includes payments on Federal Family Education Loan Program Loans (FFEL) and Federal Perkins Loans, which did not previously count under old PSLF rules. Periods of repayment on parent PLUS loans are not eligible under the PSLF Limited Waiver.

Because of this important fix, federal student loan borrowers can more easily access PSLF and obtain the relief the program promised. Public service employees who have borrowed federal student loans, including FFEL and Perkins Loans, could make substantial progress toward loan forgiveness or even achieve forgiveness of their outstanding federal student loans altogether.

There is a limited window to get this relief, and we encourage consumers to act quickly. To benefit under this change, federal student loan borrowers with FFEL or Perkins Loans have to consolidate their loans into Direct Consolidation loans and submit a PSLF Form by October 31, 2022. Borrowers who already have Direct Loans should file a PSLF form if they have not previously had their employment certified. You can learn more about the process at the Department of Education’s website.

Public service workers are still facing challenges. The CFPB has unfortunately heard that some student loan servicers are once again knocking borrowers off track as they try to access loan forgiveness. Already, consumers have told the CFPB that servicers are failing to give them the support they need to benefit under the PSLF Limited Waiver. They have told us:

“As of October 6, when the rules for PSLF where changed I now qualify for forgiveness. I have spen[t] HOURS and HOURS on hold with [servicer]. I then get an email saying I have only made one qualifying payment. I waited on hold for an hour again and was diverted to someone who didn't know [PSLF] information. They said I was diverted due to high call volume. This seems to be making it absurdly difficult to take advantage of a program meant to help people like me. I am furious and have no way to get help from someone.”

“I did everything correctly to qualify for PSLF while serving my community. Over the last six months I have spent countless hours on the phone and tracking down documentation to prove to [servicer] that my loans qualify for forgiveness. This has been met with extreme frustration.”

We also heard from consumers that servicers may be giving incorrect information about the PSLF Limited Waiver that keep consumers from getting the full benefit of the program. According to consumers:

“I have been teaching for 17 years and continue to attempt in qualifying for Public Service Loan Forgiveness this last year. I have made payments consistently for more than 120 payments. [Servicer] keeps informing me that my loan is not a direct loan but was informed by many other teachers that I can consolidate into a direct loan to qualify which they have. I cannot get a straight answer or how to consolidate this loan to a direct loan after many phone calls and letter[s] not helping to consolidate my loans.”

“On December 8, 2021, two of my federal student loans with [servicer] were forgiven pursuant to the Public Service Loan Forgiveness (PSLF) waiver. I am deeply grateful for this forgiveness. However, afterwards I learned that [my servicer] was not providing accurate information to borrowers about consolidation of Direct Loans, and had advised borrowers like me not to consolidate Direct Loans together. As a result, borrowers like me were only forgiven for a portion of their Direct Loan balances, and I have a [dollar amount] balance remaining on my federal Direct Loan balance. If [my servicer] had given the accurate information about consolidation at the time I sent my PSLF application in October 2021, then my entire Direct Loan balance would have been forgiven at the same time, as the new rule states that consolidation would give the new loan the highest payment count of the underlying consolidated loans.”

“After receiving notification regarding the extension of the PSLF Waiver Program, I completed an original consolidation online for all of my FFEL and Direct Consolidation Loans, in accordance with the waiver instructions in mid-October. I immediately became concerned because an automated letter from [servicer] indicated all my loan counts would restart at a zero payment count. So on October 22, I spoke to [representative at servicer] who told me NOT to consolidate all the loans, and she actually removed the Direct Loans from my consolidation…Because everything else was filed correctly, my account was reviewed, and I was forgiven only the FFEL loans which had the qualifying 120 payments. This payment count should have forgiven all my loans based on the new PSLF waiver; however, because of the [servicer] representative’s change, they were not. I have a timeline of events, the names of three [servicer] representatives who provided the same misinformation when I attempted to fix the first representative’s error, and screenshots of an online chat that also gave the same misinformation. Each conversation confirmed that all six loans should not have been consolidated, which apparently is completely inaccurate. I properly followed procedures but was horribly misled. I am now stuck with [dollar amount] that should have been forgiven on December 7 according to the PSLF waiver extension. How do I proceed in having the consolidation corrected?”

Servicer failure to provide the information, support, and processing that consumers need to access the PSLF Limited Waiver is not acceptable. The CFPB is committed to monitoring the industry for illegal practices and ensuring that public service employees, many who are on the front lines of the pandemic, can access the relief they deserve through PSLF. We are working to make sure that all borrowers will be able to receive the PSLF benefits for which they are eligible, especially under the PSLF Limited Waiver program.

Consumers can help hold servicers accountable. If you are having an issue with a student loan, you can submit a complaint to the CFPB online or by calling (855) 411-2372. We will continue to use complaints to hold companies accountable in our enforcement and compliance work.

Consumers can find more information about the PSLF Limited Waiver in the webinar below and in the updated Ask CFPB questions about PSLF.

To learn more about our work for students and young consumers, visit consumerfinance.gov/students.

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