There's some good news for student loan borrowers tucked away in Congress’ $1.3 trillion spending plan: $350 million has been earmarked to relieve the debt of certain borrowers. Specifically, it’s to help those who would have qualified for public student loan forgiveness but were mistakenly enrolled in the wrong type of repayment plan. The catch? Those who fall into this group need to act quickly, because the exceptions being made for them won’t last forever.


The Public Student Loan Forgiveness Program (PSLF) started in 2007 as a way to help ease student loan burdens for people who choose public service, government and nonprofit jobs. Those borrowers can then apply for forgiveness once they’ve made 120 qualifying payments toward their debt. But only federal direct loans qualify for the program, and only if they are part of an income-driven repayment plan.

Those with graduated or extended repayment plans don’t qualify for forgiveness — which recently came as a shock to some borrowers in public-service jobs who had been making payments for 10 years, only to find out that their PSLF application had been rejected because they had the wrong kind of loan. Many borrowers claimed they were misled or given incorrect information, and the Consumer Financial Protection Bureau has said that the government’s student loan servicer had ruined many borrower’s chances of getting forgiveness because of their confusing rules and administrative errors.

“This special fund gives some hope to those who thought they may have missed out on loan forgiveness altogether.”


This extra $350 million for loan forgiveness gives some hope to those who thought they may have missed out on PSLF altogether, or had fewer qualifying payments than previously thought. Here are a few things to keep in mind if you plan to apply for loan forgiveness.

  • You still need to prove that the jobs you’ve held over the past 10 years actually qualify for student loan forgiveness by filling out a Service Loan Forgiveness Employment Certification Form. (Ideally, this would have been filled out each year while you were working in a public-service job.)
  • You still have to fill out the actual PSLF application after you’ve made 120 qualifying payments.
  • The Department of Education won’t be giving all graduated or extended repayment borrowers relief. To qualify, your most recent monthly payment, as well as the one you made a year before applying for PSLF, must be as much as you would have paid under a correct income-driven repayment plan.
  • There may be some additional steps that those in incorrect repayment plans may have to complete. The new budget law states that the Department of Education has to come up with a simple communication and application process for those types of borrowers within 60 days of the spending bill becoming law.
  • Act fast. The $350 million is available on a first-come, first-served basis — and once it’s used up, it won’t be replenished.

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