Next year, student loan borrowers are going to see an important grace period on their loan repayments end, but another one is just beginning that could save student borrowers billions, according to the Department of Education.

It could save some individuals tens of thousands, say financial advisors.

In February 2022, borrowers are once again going to have to start paying down their federal student loans after a 22-month pause that started with the Covid-19 crisis and the CARES Act in March 2020. During that period, borrowers have been able to stop payments without additional interest accruing. According to Fidelity, the renewed average monthly loan repayment is going to be $515 in February. It will be even higher for baby boomers, who hold twice as much debt, the company said.

But as of early October, there’s good news for those who are looking to jump onto the federal student loan forgiveness program.

The Public Service Loan Forgiveness program is designed for teachers, doctors, nurses and other people in public service and promises loan forgiveness as long as applicants meet certain criteria. It normally requires borrowers to pay back through the Direct Loan program. But under the new rules released on October 6, borrowers can get credit for the program for past payments on different types of loans that otherwise wouldn’t count toward the program.

While it sounds like a small technical detail, it’s actually a huge window of opportunity, says Jake Northrup, an advisor at Experience Your Wealth in Rhode Island. “It could mean hundreds of thousands of dollars in savings,” he said.

The forgiveness program requires borrowers to make monthly repayments for 120 months (10 years), and to work full-time for a government or nonprofit organization (making it of special relevance to doctors and teachers). They also must be part of an income-driven repayment plan. But until now, again, the program has required the payments to be made under federal Direct Loans. That meant repayments made to other programs like Federal Family Education Loan (FFEL) Program loans and Federal Perkins Loans did not count.

Fast-forward to today. Now those who have already been paying back FFEL loans can automatically apply to have all that money put toward loan forgiveness—as long as they consolidate those loans into Direct Loans by October 31, 2022. (PLUS loans, however, are not included in the relief program.)

“There’s been an issue with the Public Service Loan Forgiveness up to this point,” Northrup says. “The rules are so stringent, where you need the right type of loan, which are Direct; the right type of repayment plan, which is income-based; and you have to work at the right type of employer, which is a 501(c)(3) or government agency.” Many people applied and couldn’t get forgiveness, he says.

The Department of Education said as much in an October 6 fact sheet: “For reference, just over 16,000 borrowers have ever received forgiveness under PSLF prior to this action.” Forbes put it more bluntly last summer: Ninety-eight percent of program applicants get the door slammed in their face.

“The department,” says the EOD fact sheet, “estimates that the limited waiver alone will help over 550,000 borrowers who had previously consolidated their loans see their progress toward PSLF grow automatically, with the average borrower receiving 23 additional payments. This includes approximately 22,000 borrowers who will be immediately eligible to have their federal student loans discharged without further action on their part, totaling $1.74 billion in forgiveness. Another 27,000 borrowers could potentially qualify for $2.82 billion in forgiveness if they certify additional periods of employment.”

Again, this is big news for those who’ve already spent years paying down on the “wrong” kind of loan, says Meaghan Landress, a financial coach and certified student loan professional in Atlanta.

One of her clients works at a nonprofit school in Atlanta and had made 16 years’ worth of FFEL loan repayments. While he could have consolidated into a Direct Loan to qualify for the loan forgiveness program, the consolidation would have restarted the clock on his 120 consecutive loan payments, making the loan forgiveness irrelevant considering what he had already paid.

Now she says, “he's eligible for immediate forgiveness, with his prior payment history after he consolidates and submits an employment certification form to verify his work history. This man cried tears of happiness on our Zoom call! … He'll be getting $34,000 forgiven through this waiver! I was in tears!”

Northrup says that it could also help those who consolidated at the wrong time. He has one client who did a Direct Consolidation loan in 2018. “What they did is reset the clock toward PSLF. All my clients’ loans prior to 2018, even though she was working at a nonprofit and she was on an income-based repayment plan, it got wiped out, so that she started again as of 2018. Now with this change, we can go back and say ‘Let’s look at all the places you worked … We might be able to give her full access to Public Service Loan Forgiveness as long as she’s had 10 years of forgiveness, as opposed to just the three years from 2018.”

This all might be better heard from a financial advisor, however, than from loan servicing companies themselves.

Northrup points out that student loan servicing companies aren’t fiduciaries and aren’t required to give you the best advice—in fact, they might not steer you to the best programs or repayment plans because it would lose them money, which poses an inherent conflict of interest, he says.