By: Reyna Gobel

Updated: May 2, 2022.

Public Service Loan Forgiveness (PSLF) is known as an exciting but confusing program. While it’s great that for public service employees the remaining balance on student loans is forgiven after 10 years of on-time, income-based payment plans, it’s not exciting that 98 percent of borrowers who apply get rejected. The reasons can vary from not making enough on-time payments to not filling out paperwork properly. 

Well, great news for those that have or those thinking they will apply for PSLF and are missing specific requirements below including how recent announcements about counting more payments as income-driven payments, no matter which repayment plan was chosen or if payments were made. 

The type of federal student loan you have temporarily doesn’t matter.

Normally, the payments you made only count with Direct Loans, whether they were originally borrowed as Direct Loans or consolidated to them. The other common type of federal student loans are Federal Family Education Loans (FFEL). These loans were backed by the federal government but issued by banks such as Wells Fargo. Loans that were originally Direct Loans may have a bank as a servicer but they are always called Direct Loans. The FFEL program ended in 2010. You can consolidate your loans to the Direct Loans program using this link. 

The exception to the type of federal student loan doesn’t matter rule is parent PLUS loans. They aren’t eligible for temporary forgiveness.

Payment plan temporarily doesn’t matter.

If you had a consolidated loan or an extended plan, you normally wouldn’t qualify for Public Service Loan Forgiveness. You could now. Repayment plans choices don’t matter on the payments you made through Halloween this year. 

Note: If you won’t achieve 10 years payments while working for a public service employer by October 31, 2022, continue to or get on an income-driven repayment plan. This rule only applies if qualifying by that date. However, scroll forward to the forbearance steering section, it will speed along forbearance no matter what the repayment plan is you chose.

You can get Teacher Forgiveness for the same time period.

Teachers teaching in low-income areas can get Teacher Forgiveness for up to $17,500 after just 5 years of federal student loan repayment. Generally, these 5 years can’t count towards Public Service Loan Forgiveness as well. Thus, you’d have to work 15 years as a teacher or  teaching plus other public service work to have anything forgiven beyond $17,500. 

For example, let’s say you have $60,000 in federal student loans from an undergraduate and a graduate degree you finished in 2012. After five years, you’re left with a remaining balance of over $45,000 including interest. You’re still working for a public service employer and keep making payments. Normally, you would have to wait another 10 years until 2027 to get your remaining loans forgiven. However, because your first 5 years during teaching counts towards your Public Service Loan Forgiveness, you can get the remaining balance forgiven if you request it by October 31, 2022. 

You still must have a direct loan now.

Public service loan forgiveness requires the loans you ask to forgiven are direct loans. Since forgiveness happens until October 31, 2022, you have plenty of time to consolidate your loans to direct lending.

Since the public service loan forgiveness program deadline is extended until October 31, 2022, you can consolidate your loans to direct lending beforehand. It generally takes about three weeks. Our suggestion is to consolidate now because there is no interest being charged on loans and you’re accruing on-time payments until May 1, whether or not you are making payments.

Partial payments count.

Normally, you have to make the full payment your federal loan servicer requested. However, during this temporary time period some of the 10 years of repayment can include partial payments. 

Not all payments need to be on-time.

 While the program has always stated they must be on-time payments, late payments you made count, too until October 31, 2022. 

Work for a public service employer can be Past Tense. 

Generally, you have to be working for a public service employer full time when you ask for forgiveness. Now, as long as you were working in the public service for 10 years of repayment your loans may be forgiven. Time during the COVID forbearance counts, event if you weren’t working for a public service loan forgiveness. Categories that count include: “being employed by government, 501(c)(3) not-for-profit, or other not-for-profit organization that provides a qualifying service.*

 Employers can also have government contracts where you qualify because of that specific contract. It’s been estimated between one quarter and one third of Americans could qualify. So if you have any inkling you could qualify, fill out the Public Service Loan Forgiveness Employment Certification form. 

Making 120 payments is still important.

All the new rules aside, the goal is still 120 months of payments. The only difference is that the partial payments and paymenths not made during COVID forbearance also count.

Work for a Public Service Employer Can Be Past Tense. 

Generally, you have to be working for a public service employer full time when you ask for forgiveness. Now, as long as you were working in the public service for 10 years of repayment your loans may be forgiven. Time during the COVID forbearance counts, event if you weren’t working for a public service loan forgiveness. Categories that count include: “being employed by government, 501(c)(3) not-for-profit, or other not-for-profit organization that provides a qualifying service.*

 Employers can also have government contracts where you qualify because of that specific contract. It’s been estimated between one quarter and one third of Americans could qualify. So if you have any inkling you could qualify, fill out the Public Service Loan Forgiveness Employment Certification form. 

Making 120 payments is still important.

All the new rules aside, the goal is still 120 months of payments. The only difference is that the partial payments and payments not made during COVID forbearance also count.

Recent Changes on Forbearance Steering will Help.

Whether or not you qualify for the temporary public service waiver, new changes the federal government made to how time in forbearance or deferment affects your payment history may help, too. The government will automatically apply months you spent in 12 or more months of payments or 36 months of cumulative forbearance as payments. For instance, let’s say you were on forbearance for 5 years of your loan.  Those payments would now count towards your Public Service Loan Forgiveness as long as you were also working for a public service employer. Time periods in deferment before 2013 with the exception of in-school deferment also counts towards forgiveness.

Make sure you update your public service loan forgiveness employer certification form for all periods of time you were working for one.

There are Other Public, State, and Private Partial Forgiveness Options 

The good news is there are other programs for student loan forgiveness if you don’t qualify for this one. The Veteran’s Administration, state department of education websites, and employers’ human resources departments are all getting on board with different levels of loan forgiveness.

Bottom Line for Borrowers Who Could Qualify in the Future

Public Service Loan Forgiveness is an amazing program that can help a lot of borrowers get much needed student loan relief. However, the rules are strict and not following them all can result in no or delayed forgiveness.

Do the following immediately:

• Consolidate to Direct Lending if you haven’t already. Only direct loans can be forgiven.
• Submit the employment verification form as soon as possible. Then, you’ll know if your employer does or doesn’t qualify, so you know if you may qualify in the future. You may decide to switch jobs to a public service employer if it doesn’t. You may also decide your current job that doesn’t qualify is important enough that you don’t worry about getting PSLF. 
• Choose an income-driven repayment plan. PSLF normally forgives the remaining balance after 10 years on the standard 10-year plan or income-driven plans. All other plans are ineligible.
• If still in college, don’t consider the PSLF as a guaranteed. You’re not in the program until paperwork is filled out after graduation.  The program could end or change in the future.

Bottomline for Those Who Could Qualify for PSLF under the Temporary Rules

This program is like a sale on loan forgiveness. Requirements are reduced and you must act fast. The sale end date is October 31, 2022. If you were rejected for public service loan forgiveness when you applied before, no problem. Just make sure before you apply for the waiver by the deadline and have or consolidate to a Direct Loan. Whether or not you qualify, it new forbearance steering changes could speed up loan repayment. So make sure you have a Direct Loan regardless.