By Amy Miller, AFC®
Since 2007, The Public Service Loan Forgiveness (PSLF) program has allowed individuals with qualifying student loans to be forgiven the remaining balance of their loans after making 120 payments (10 years) while working for a public service employer.
Last year, due to the Covid 19 Pandemic, the US Dept of Education announced a change to the PSLF rules allowing borrowers to receive credit for payments that may not have previously qualified.
What Payments Qualify?
This limited waiver is available for any direct loan payment made after the PSLF program originated. Payments can qualify regardless of the repayment plan, with qualifying employment, and regardless of the payment being made on time or in full. Forbearance periods of 12 or more months may also count.
These temporary rules apply to direct loans, loans that have already been consolidated, or any that apply to be consolidated before the October 31, 2022 deadline.
It’s important to note that payments made on any FFEL Program or Perkins Loan Programs before being consolidated to Direct loans, forbearance periods provided by the COVID-19 Emergency Relief Flexibilities, periods of default, in-school deferments, and Parent Plus loans are not included.
Qualifying Employers
The PSLF program considers any U.S. federal, state, local or tribal government agency as a qualifying employer. That includes the U.S. Military, public schools, public colleges and universities, public child and family service agencies, and some special government entities like transportation, water, and housing authorities. (Government contractors are not included)
Not-for-profits must be either a tax-exempt 501(c)(3) or provide qualifying services such as emergency management, public safety, services for individuals with disabilities or the elderly, public education, legal services, or libraries to qualify. Some health care services qualify as well and include nurses and some other support occupations.
You must have worked full-time for a qualifying employer during the month you made the payment on your loan.
What do I to Qualify?
Your action plan will depend on the type of your loan. You can determine your loan type and what payments will qualify by logging in to your account at Student Aid. There, you will be able to view a detailed breakdown of each of your loans and their type.
If you haven’t already done so, you must consolidate your loans into the Direct Loan program by the October 31, 2022 deadline to qualify.
You will then need to complete and submit a PSLF form for the payments you are seeking credit for under the program. A help tool is offered that will allow you to search for qualifying employers and will generate the form you need to complete. You will be required to have your employer(s) certify your employment by signing a document as well.
The form, with your employer certification, will need to be sent to FedLoan Servicing – I have included the address and fax below.
U.S. Department of Education
FedLoan Servicing
P.O. Box 69184
Harrisburg, PA 17106-9184
Fax Number: (717) 720-1628
Once submitted and evaluated, FedLoan Servicing will provide a report outlining the number of qualifying payments you have made toward both PSLF and this temporary waiver.
As with any loan, I always recommend individuals track their payments and proof of those payments. (You can opt to receive a PDF or email confirmation each time you make a payment. I always recommend saving all of them – I file them by date!)
Additionally, it is imperative to keep documents supporting your qualified employment. I also encourage individuals to calculate what is owed and the terms of each loan.
This is an excellent opportunity to review your loan(s) and possibly consolidate those to gain credit for any qualifying payments you have made or will make.
Remember, the deadline for this limited waiver is October 31, 2022, so act now!
For more information please visit:
https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service/questions