The Biden administration is ramping up student loan forgiveness processing for two major initiatives. One – the PSLF Limited Waiver Program – ends in a matter of weeks. The other โ€” Biden’s one-time debt relief initiative to clear up to $10,000 or $20,000 in student loans for most borrowers โ€” is just getting started.

As millions of borrowers prepare to apply for student loan forgiveness, here’s what to expect.

Application Process for $10,000 or $20,000 in Student Loan Forgiveness under the Biden Initiative

Under Biden’s one-time debt relief initiative, millions of borrowers will be eligible for up to $20,000 in federal student loan forgiveness. Borrowers who have received Pell grants can receive the maximum loan forgiveness amount, while borrowers who have not received Pell grants can still receive up to $10,000 for debt cancellation. Eligibility is limited to borrowers who earned less than $125,000 ($250,000 if married) in 2020 or 2021.

The Department of Education will issue the Student Loan Forgiveness Application in just a few weeks, and it should be available at StudentAid.gov. Borrowers will have until December 31, 2023 to apply. The application is expected as a simple certificate of income. While the administration says that some student loan forgiveness will be granted to borrowers automatically if the Department of Education already has the borrower’s income data, all borrowers are encouraged to apply.

After the application is submitted, administration officials expect the processing to take four to six weeks. Then, the Department of Education will apply the Student Loan Forgiveness Grant in the following order: first to non-performing student loans held by the government, then to non-performing FFEL business loans, then to direct management loans and FFEL loans in good standing, and then to Department-held Perkins loans Which is in good standing. For borrowers with multiple federal student loans in the same category or program, the Department of Education will first prioritize loans with the highest interest rate, and then focus on unsubsidized loans.

Some borrowers may see a decrease in their monthly student loan payments after student loan forgiveness is applied to their balance, as the Department of Education will re-amortise loan balances to borrowers in non-income-based payment plans.

Borrowers who made payments during a Covid-19 student loan halt are entitled to an automatic refund if their payments reduce their balance below the maximum student loan forgiveness amount they would have received under the Biden administration’s initiative if they did not make those voluntary payments. Other borrowers with government-held federal student loans can request refunds of voluntary payments made during the pandemic, although those refunds will not be automatic.

The Department of Education will conduct a small number of audits to verify borrowers' income information as stated in the Student Loan Forgiveness application.

Application Process for Borrowers Claiming a PSLF Limited Waiver

The Biden administration enacted a limited PSLF waiver last year. The forgiveness temporarily changes many of the PSLF's strict rules to expand what is considered a "credit" the approximately 120 eligible payments required for borrowers to obtain student loan forgiveness through Public Service Loan Forgiveness. Specifically, the PSLF's limited waiver allows the Department of Education to retroactively calculate certain periods of payments, deferments, and forgiveness that might otherwise have been denied.

Borrowers with FFEL loans must consolidate these loans through the Federal Direct Consolidation Loan Program before October 31, 2022 to qualify. Direct borrowers and FFEL loans who have not yet completed and submitted PSLF Certificate of Employment forms will need to do so by that date as well.

Direct loan consolidation applications usually take about thirty to sixty days to be processed after the borrower submits his application. To qualify for the PSLF Limited Waiver, borrowers must FFEL send Apply for direct integration (and their PSLF forms) before the end of October, but the Department of Education does not have to complete processing by then.

Borrowers must choose MOHELA - the Department of Education Services contracted to handle the PSLF program - as their loan service. MOHELA is also the loan service provider that will process PSLF Employment Certificate forms. Existing direct loan borrowers whose student loans are not serviced by the Department of Human Resources, their loans will be transferred to MOHELA as the agency processes their PSLF forms.

On the PSLF Employment Certificate form, borrowers can indicate if they only want a number of eligible PSLF payments, or they believe they have made at least 120 eligible payments that are required for student loan forgiveness under the program. If so, borrowers can also request forbearance while their forms are processed. Borrowers need to submit a separate Certificate of Employment form for each public service employer.

MOHELA may initially provide borrowers with a PSLF payment number indicating that they have not made eligible payments or have made too few payments. This is because MOHELA will apply the more restrictive "original" PSLF rules during the initial review. The Department of Education is then supposed to review its own Level II, applying the limited PSLF waiver and updating or adjusting borrowers' PSLF accounts accordingly. This process may take several months, and may not be completed until well after October 31st.

Borrowers who believe that MOHELA or the Department of Education has reduced eligible PSLF payments under the PSLF Limited Waiver may file an appeal or request for reconsideration. โ€œWe recommend that you wait until the PSLF limited exemption period has expiredโ€ฆbefore submitting an application for reconsideration so that our evaluation of your application is based on the most recent information,โ€ says the Department of Education.

Resources for borrowers seeking student loan forgiveness

  • To learn more about the Biden administration's one-time debt relief initiative, visit the Department of Education's dedicated website.
  • To learn more about the PSLF Limited Waiver, visit the Department of Education's dedicated website.
  • To explore or complete direct loan consolidation, go here.
  • To begin the process of completing PSLF Employment Certificate forms, use the Department of Education's PSLF Help Tool.
  • To submit a PSLF review request, go here.

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