“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.