Last week, the U.S. Department of Education announced some major changes to the rules and qualifications around the Public Service Loan Forgiveness (PSLF) Program. Now, for a limited period of time, borrowers may receive credit for past payments made on loans that would otherwise not qualify for PSLF.
First, let’s take a look at what has not changed:
Qualifying Employment
- You must have worked full-time for a qualifying employer when the payments were made. An employment certification form still needs to be submitted to certify the time frame when the payments were made.
- Note: You can receive credit only for payments made after October 1, 2007, since that is when the PSLF Program began.
120 Payments
- You will still need a total of 120 payments to qualify for the loan forgiveness. However, what counts as a “qualifying” payment has changed (more below), and past payments that have been deemed “ineligible” may now count.
Now, for what has changed:
Income-Driven Repayment Plan
- Previously: Only payments made while on an Income-Driven Repayment (IDR) plan counted toward the 120 payments necessary for forgiveness.
- The Change: Past payments under any repayment plan count
- This should include standard, graduated, extended
Federal Family Education Loans (FFEL) & Perkins Loans
- Previously: Only Direct Student Loans were eligible for PSLF, and consolidating FFEL loans into Direct Loans would reset any previous progress toward the 120 payments necessary for forgiveness
- The Change: Still, only Direct Loans are eligible for PSLF under the temporary waiver. However, if you request a Direct Consolidation by October 31, 2022, your previous payments will not be “reset.”
If you think you qualify, here are the next steps:
1. Verify Employment
- In order to verify that you have worked for a qualifying employer while making the 120 payments, you will need to submit an Employment Certification Form (or PSLF Form) for each employer you worked for during those 10 years.
2. Consolidate FFEL & Perkins Loans
- Once you have confirmed that your employment is eligible, you will need to request a Direct Consolidation Loan (online application here) by October 31, 2022.
- Note: This only needs to be done if loans are not already Direct Loans. Also, consolidation can be done for free on gov – do not pay any service claiming they can help with consolidation.
3. Submit Application for PSLF & TEPSLF (Temporary Expanded PSLF)
Coming soon
Stay Tuned - We will release a bonus episode of the Prosperous Doc® podcast where we will discuss this announcement and other federal student loan topics and common questions.
SDT is Here to Support You
It is clear that the student loan world is changing rapidly. The Spaugh Dameron Tenny team will continue to monitor the announcements from the Department of Education and help you understand how the changes may affect your situation. Please reach out to your trusted advisor with any questions.
Further Reading:
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