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7 PSLF CHANGES 7/1/23
>> PSLF Employment Certification Form Is All Electronic Now, even signatures.
>> A Consolidation No Longer Erases Previous Repayment History
>> Certain Deferments and Forbearances Will Count:
These Deferments and Forbearances that WILL count as credit toward PSLF:
Administrative or mandatory administrative forbearance—these are generally those pesky months when you are switching repayment plans or certifying income and your servicer has to put your account on hold
Post-active duty
Cancer treatment deferment
Military service deferment
Post-active duty student deferment
Economic hardship deferment, which includes service in the Peace Corps—we sometimes see physicians in training eligible to qualify for this
AmeriCorps and National Guard service forbearance
US Department of Defense Student Loan Repayment Program forbearance
>> If a borrower has to enter deferment or forbearance because of a hardship, and they could have stayed (or enrolled) into an income-driven plan with a required monthly payment of $0, they would still be eligible to receive credit for PSLF.
>> 30 Hours Per Week Is Minimum Employment + Special Rules to Help Adjuncts For each credit hour taught by an adjunct or contingent faculty, the borrower would receive 3.35 hours of work. So, you’d need to teach at least 9 credit hours to qualify.
>> Borrowers may receive PSLF credit on late payments, installments, or some lump sum payments.
>> CA & TX Medical Professionals: when you work in California or Texas and your direct employment at a nonprofit hospital is barred by state law, you can begin to qualify for PSLF
PSLF TOOLS & RESOURCES:
DEPT WEBPAGE: https://studentaid.gov/pslf/
PSLF HELP TOOL TO CREATE EMPLOYER CERTIFICATION/APPLICATION FORMS: https://studentaid.gov/pslf/
PSLF “NINJA”HELP PAGE: https://studentaid.gov/articles/become-a-pslf-help-tool-ninja/
EMPLOYER EIN SEARCH TOOL: https://studentaid.gov/pslf/employer-search
PSLF [PUBLIC SERVICE LOAN FORGIVENESS] PROGRAM
DOES THIS PROGRAM APPLY TO YOU?
LOTS OF PEOPLE DO NOT UNDERSTAND YOU CAN GET YOUR FULL FEDERAL STUDENT LOAN BALANCES FORGIVEN UNDER PSLF AFTER MAKING — OR GETTING CREDIT FOR MAKING — 10 YEARS [120 MONTHS] OF PAYMENTS WHILE WORKING FOR A QUALIFYING EMPLOYER..
TO FIX THIS VERY BROKEN PROGRAM, THE DEPARTMENT OF EDUCATION WILL NOW GIVE YOU WORK/PAYMENT CREDIT FOR MONTHS WHEN YOU DID NOT PAY OR PAID LATE, OR WERE IN AN INELIGIBLE PAYMENT PROGRAM..
WHAT MATTERS? # 1 DOES YOUR EMPLOYER QUALIFY? PLEASE STOP ASSUMING YOUR EMPLOYERS DO NOT QUALIFY!
TWO EMPLOYER TYPES QUALIFY — ANY GOVERNMENT AGENCY [FEDERAL, STATE, LOCAL OR TRIBAL] or ANY 501(c)3 NON-PROFIT ENTITY. YES, SCHOOL DISTRICTS ARE LOCAL GOVERNMENT ENTITIES - SO THEY QUALIFY!
SINCE OCTOBER 2007, WERE YOU WORKING AT ALMOST ANY JOB AT A GOVERNMENT OR 501(c)3 EMPLOYER?
TEACHERS, NURSES, ACCOUNTANTS, CPAs, JANITORS, OFFICE WORKERS, US SERVICEMEMBERS, MAINTENANCE WORKERS, VICE PRESIDENTS, MARKETING MANAGERS, KENNEL CLEANERS, POLICE, DONATION SORTERS, TEACHERS’ AIDS OR SUBSTITUTES, EMTs, LIFEGUARDS, TRUCK DRIVERS, ORDERLIES, IRS AGENTS - - YOU NAME IT. THE JOB OR JOB TITLE IS NOT IMPORTANT — ONLY HAVING ONE OF THE TWO TYPES OF QUALIFYING EMPLOYERS IS WHAT MATTERS!!
[AND YOU HAVE TO HAVE WORKED FOR THESE EMPLOYERS WHAT THEY CALL FULL-TIME OR 30 or MORE HOURS PER WEEK WHICH THE DEPARTMENT SAYS IS FULL-TIME]
SO MAKE A LIST OF ALL YOUR EMPLOYERS SINCE OCT. 2007 TO SEE HOW MANY EMPLOYED MONTHS YOU MAY BE ELIGIBLE FOR!
BIG MISCONCEPTION - “I DON’T QUALIFY BECAUSE I HAVE ONLY MADE A FEW PAYMENTS.”
THE DEPARTMENT IS NOW AWARDING PSLF WORK MONTH CREDITS EVEN FOR SOME TIMES YOU DID NOT PAY! READ ON…
PSLF HISTORY
STARTED OCT 2007.
NOT EXPLAINED WELL - NOBODY TOLD YOU ONLY DIRECT LOANS & ONLY IDR PLAN PAYMENTS COUNTED!
SERVICERS DID TERRIBLE JOB EXPLAINING — EVEN FEDLOAN, THE OLD “PSLF SERVICER.”
ORIGINAL PSLF HAD A LOT MORE NITPICKY RULES - MAIN PROBLEM WAS YOU HAD TO HAVE ONLY DIRECT LOANS & BE MAKING PAYMENTS IN AN IDR PLAN BUT SERVICERS DID NOT EXPLAIN THAT.
FOR MANY YEARS, THERE WERE NO FORMS TO VERIFY IF YOUR WORK QUALIFIED.
EMPLOYER CERTIFICATION FORMS FINALLY RELEASED.
OCTOBER 2017 - IST TIME SOMEONE COULD APPLY FOR FORGIVENESS WITH 10 YEARS PAYMENTS - FINALLY - AN APPLICATION FORM!
2018 CONGRESS CHANGED RULES SO YOU COULD APPLY FOR “TEPSLF” IF YOU HAD BEEN IN THE WRONG REPAYMENT PLAN.
DEPT. CREATED ONE FORM TO CERTIFY EMPLOYMENT AND/OR APPLY FOR FORGIVENESS.
GAO AUDIT FOUND SINCE 2007, ONLY A FEW HUNDRED PEOPLE GOT PSLF or TEPSLF FORGIVENESS.
ONLINE” PSLF HELP TOOL” & EMPLOYER EIN SEARCH TOOL INTRODUCED
AS A FIX, IN OCTOBER 2021 DEPT ANNOUNCED “PSLF LIMITED WAIVER” PROGRAM BASED ON COVID EMERGENCY LAW — MOHELA BECAME ONLY PSLF SERVICER.
LIMITED WAIVER GAVE PEOPLE CREDIT FOR MONTHS THAT NORMALLY WOULD NOT HAVE COUNTED.
LIMITED WAIVER EXPIRED 10/31/22 — “Over 236,000 teachers, nurses, veterans, government employees and other public service workers had more than $14 billion in debt relief” under Limited Waiver.
NEW TEMPORARY & PERMANENT PSLF FIXES:
PSLF LIMITED WAIVER “TAKE 2”:
DEPARTMENT MODIFIES PSLF & WILL PAIR IT WITH UPCOMING “IDR AUDIT” PROGRAM
Because the one-time IDR AUDIT account adjustment [DESCRIBED IN 11/1/22 EMAIL] will not be implemented until 2023, a borrower who missed the PSLF Limited Waiver 10/31/22 deadline, will have one more chance to have their payment count corrected. Here is how the Limited PSLF Waiver and the one-time IDR AUDIT account adjustment will work together for borrowers who work in public service:
• A borrower who submittted a PSLF form by October 31, 2022 will have their time in repayment credited under the Limited PSLF Waiver. They will also have time in deferment and forbearance credited to them for both IDR and PSLF under the one-time IDR AUDIT account adjustment in July 2023. As the Department continues to process PSLF forms, borrowers may see their payment counts adjust after October 31, 2022.
• A borrower who has NEVER applied for PSLF and submits a PSLF form NOW AFTER October 31, 2022, will have their PSLF form assessed under normal PSLF rules below. However, they may receive additional credit toward PSLF for any periods of certified employment when the one-time IDR AUDIT account adjustment occurs in July.
At that point, borrowers who reach 120 qualifying payments, may need to provide additional certification that they remain employed by a qualifying employer. Like the Limited PSLF Waiver, any changes made to your account based on the one-time IDR AUDIT adjustment will be permanent and will count toward your IDR or PSLF forgiveness at any time in the future.
While the one-time IDR AUDIT account adjustment is largely similar to the Limited PSLF Waiver, there are some KEY differences in both benefits and process. First, the one-time IDR AUDIT account adjustment provides credit for periods that were not added under the PSLF Limited Waiver. It credits certain periods in deferment and forbearance towards IDR and PSLF for months beyond those provided by the Limited PSLF Waiver.
Finally, borrowers with Direct Loans do not have to apply for PSLF by July 1, 2023. The credit awarded as part of the one-time IDR AUDIT account adjustment can be later counted toward PSLF if the borrower certifies employment. While the one-time IDR account adjustment provides some benefits for borrowers that go beyond the Limited PSLF Waiver, there are several PSLF requirements that will no longer be waived after October 31.
1)borrowers will no longer be allowed to count the same period of service toward both Teacher Loan Forgiveness (TLF) and PSLF.
2) A borrower will have to be employed by a qualifying employer when they apply for and receive PSLF forgiveness. Borrowers can indicate they are still employed on the PSLF form by checking the ‘Still Employed’ box on line 6.
NEW PSLF CHANGES THROUGH 7/1/22→
NEW PSLF PLAN includes benefits that borrowers with Direct Loans or Federal Family Education Loans (FFEL) managed by the Department will receive in July 2023 as part of a one-time IDR AUDIT account adjustment. This one-time IDR AUDIT account adjustment fixes longstanding problems faced by borrowers receiving credit toward forgiveness under income-driven repayment (IDR) plans and PSLF. SO updated payment counts credited toward IDR forgiveness under the IDR Audit also count toward PSLF for any months in which a borrower has certified qualifying employment on loans borrowed as a student. Borrowers with eligible loans do not need to apply for this credit, it will be automatically computed by the Department.
Borrowers who do not have eligible loans [ DIRECT] will need to apply for consolidation no later than May 1, 2023, to ensure they benefit from the one-time account adjustment. Department is also announcing permanent improvements to the PSLF program through updated regulations, which will be published by November 1. These regulations eliminate many unnecessary barriers to obtaining PSLF credit.
Borrowers who reach 120 payments for PSLF due to the inclusion of periods in deferment or forbearance will also receive forgiveness if the 120th month occurred before November 2022.Borrowers who receive additional credit for PSLF through the one-time IDR Audit account adjustment but who do not reach the required monthly payments under the programs will have their accounts adjusted in July 2023
FUTURE PSLF CHANGES STARTING JULY 1, 2023→
Department also announced permanent improvements to the PSLF program through updated regulations, which will be published by November 1, 2022.
Help borrowers earn progress toward PSLF
• Allow borrowers to receive credit toward PSLF on payments that are made late, in installments, or in a lump sum. Prior rules only counted a payment as eligible if it was made in full within 15 days of its due date.
• Count certain periods in deferment or forbearance toward PSLF to avoid instances where a borrower may have faced confusing choices about pausing payments or getting credit toward PSLF. These periods include:
o Cancer treatment deferment
o Military service deferment
o Post-active-duty student deferment
o Economic hardship deferment, which includes service in the Peace Corps
o AmeriCorps and National Guard service forbearances
o U.S. Department of Defense Student Loan Repayment Program forbearance
o Administrative or mandatory administrative forbearances
• Borrowers will receive a weighted average of existing qualifying payments toward PSLF when they consolidate their Direct Loans. Under current rules, borrowers lose all progress toward forgiveness when they consolidate. Under the new regulations, for example, a borrower with 60 qualifying payments on Direct Loan with a balance of $30,000 who consolidates their loan with another Direct Loan with a balance of $30,000 with 0 qualifying payments will have a new payment count of 30 payments.
Simplify criteria to help borrowers certify employment
• Adopt a single standard of full-time employment at 30 hours a week. Prior rules required borrowers to either work 30 hours per week at multiple jobs or whatever their employer defined as full-time. This created confusing and varying standards. A single 30-hour-a-week 4 requirement will make it easier for borrowers and employers to establish what it means to be full-time.
• Require employers, for purposes of PSLF, to give adjunct and contingent faculty credit of at least 3.35 hours of work for every credit hour taught. Historically, employers have struggled to determine the work hours of adjunct instructors. This minimum conversion factor will help employers figure out the number of hours to certify.
• Allow a qualifying employer to certify employment for a contractor if that individual is providing services that by State law cannot be filled or provided by an employee of that organization. The Department is aware of specific circumstances where existing state laws generally prevent doctors at nonprofit hospitals in California and Texas from working for the hospital directly. This change would cover those individuals as well as any other contractor whose employment is similarly barred by state law. Provide opportunities to correct problems
• Borrowers will be able to access a hold harmless option to have other periods of deferment and forbearance potentially counted toward PSLF if they make payments equivalent to what they would have owed at the time. This includes getting credit for periods during which the borrower would have had a $0 payment.
• Department formalized the reconsideration process for borrowers to have their applications reviewed again if there are errors made in review.
NOTE: In the Notice of Proposed Rulemaking, the Department asked questions about the possibility of allowing early childhood education providers who operate as private for-profit businesses to be considered an eligible employer for the purposes of PSLF. In response, the Department received many detailed comments about early childhood education as well as a range of other for-profit employers. To ensure those comments receive necessary attention, the Department will publish a separate final rule addressing comments related to the definition of an eligible employer and its applicability to for-profit employers.
Information from recent Department Press Releases or Fact Sheets.
ORIGINAL PSLF RULES WITH CHANGES NOTED ABOVE
Number 1: ONLY DIRECT or Direct Consolidated loans count – not FFEL or Perkins or Parent Plus or other types and no private student loans count. But if you have an ineligible federal student loan, you may be able to consolidate it to a Direct Consolidation loan to be eligible!
NEW: IF YOU CONSOLIDATE, borrowers will receive a weighted average of existing qualifying payments toward PSLF when they consolidate to get Direct Loans. Under current rules, borrowers lose all progress toward forgiveness when they consolidate. Under the new regulations, for example, a borrower with 60 qualifying payments on Direct Loan with a balance of $30,000 who consolidates their loan with another Direct Loan with a balance of $30,000 with 0 qualifying payments will have a new payment count of 30 payments.
Number 2: You have to work or have worked for a qualified employer -- a government [local, state, federal or tribal] OR ANY 501(c)(3) non-profit [many types!!]. You can have a mixed set of eligible employers over time with employment or payment gaps as long as you have 120 timely payments when you apply for PSLF. Your W-2 will give your employer’s federal EIN number you can use to check employer’s eligibility. Check - do not assume eligibility!
Government organizations at any level (federal, state, local, or tribal)
Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
Other types of not-for-profit organizations that are not tax-exempt under Section 501(c)(3) of the Internal Revenue Code, if their primary purpose is to provide certain types of qualifying public services
Serving as a full-time AmeriCorps or Peace Corps volunteer
Number 3: You have to work or have worked full-time for qualified employer(s) and the minimum total to be a full-time eligible employee is 30 hours per week.
NEW: Prior rules required borrowers to either work 30 hours per week at multiple jobs or whatever their employer defined as full-time. This created confusing and varying standards. A single 30-hour-a-week 4 requirement will make it easier for borrowers and employers to establish what it means to be full-time
Number 4: You will have to have worked for one or more qualified employer(s) for ten years TOTAL since October, 2007. There can be gaps — employment does not have to have been consecutive — but you need 120 payment months total.
Number 5: You have to be current and not in default on your federal student loans payments for a payment to count. Payments made while in default or bankruptcy do not count. But you can use “Fresh Start” program to get out of default.
Number 6: Your 120 payments you use to apply for forgiveness must have been made while you were in a qualifying repayment program. [See TEPSLF note below for new information since 2019].
Qualifying repayment plans include the income-driven repayment plans [ICR, IBR, PAYE, REPAYE]
· Even though the 10-year Standard Repayment Plan is also a qualifying repayment plan for PSLF, you cannot receive PSLF unless you enter an income-driven repayment [IDR] plan. Here’s why: If you are in repayment on the 10-year Standard Repayment Plan during the entire time you are working toward PSLF, you will have no remaining balance left to forgive after you have made 120 [10 years] qualifying PSLF payments. Therefore, if you are seeking PSLF and are not already repaying under an income-driven repayment plan, you should change to an income-driven repayment plan as soon as possible.
· It's important to understand that the Standard Repayment Plan for Direct Consolidation Loans is not the same repayment plan as the 10-Year Standard Repayment Plan, and payments made under the Standard Repayment Plan for Direct Consolidation Loans do not usually qualify for PSLF purposes.
And number 7: You have to apply to the federal student loan Servicer, Mohela, for forgiveness.
And for those who have not yet made 10 years [which is 120 months] of eligible payments, you can submit employment paperwork to verify that your past payments qualify and calculate how many more payments you need to make the required 120 and apply for forgiveness when you hit 120.
TEPSLF DID NOT EXPIRE!
TEPSLF opportunity to apply again if you made payments under wrong repayment plan. This plan continues into 2023 even after the Limited Waiver and beyond as long as the funds Congress set aside for TEPSLF remain.
Mohela will reconsider your eligibility for TEPSLF using an expanded list of qualifying repayment plans. Some payments that don’t count toward loan forgiveness under PSLF may count toward forgiveness under TEPSLF. The additional qualifying repayment plans include the Graduated Repayment Plan, Extended Repayment Plan, Consolidation Standard Repayment Plan, and Consolidation Graduated Repayment Plan. These plans don’t usually qualify for PSLF.
You will be eligible for the TEPSLF opportunity only if, among other requirements, the amount you paid 12 months prior to applying for TEPSLF and the last payment you made before applying for TEPSLF are at least as much as you would have paid under an income-driven repayment plan. FedLoan Servicing will assess this and contact you if they need documentation of your income to determine whether you are eligible.