Public Service Loan Forgiveness

If you are working in the public service, there is a good chance for you to get rid of your student debt. Since 2017, Federal Student Aid has begun to accept and review applications from debtors who seek forgiveness with Public Service Loan Forgiveness (PSLF). This program is based on the 2007 College Cost Reduction and Access Act. It allows borrowers who took Direct Loan and made 120 qualifying payments to get forgiveness for any outstanding balance. Plus, a borrower should be a full-time employee of the qualifying employer. The repayment plan type also matters as plans other than Income-Driven repayment might not be eligible for PSLF. However, not many people can satisfy these requirements. Recent Public Service Loan Forgiveness update indicated that only 1% of applicants got forgiveness. As much as it is a beneficial program, as difficult it is.

After you satisfy all the requirements and make 120 payments, it is time to apply for the PSLF plan. To benefit from this program, you should send your application form via mail or fax them. If your application review is positive, you will get a notice that your outstanding debt is forgiven. In case of rejection, you can still have a chance. For such a re-application, the reason for your rejection should be a non-qualifying repayment plan for some or all payments. In this case, you can apply Temporary Expanded Public Service Loan Forgiveness (TEPSLF) to get forgiveness.

Why Do You Need Our Help?

It might seem simple; however, each element in eligibility criteria- full-time work, qualifying employer and payment, loan type- needs clarification in details. The conditions have many exceptions and sub-requirements, which can divert you from the right path of PSLF. Therefore, it is better to get external help and guidance from a third-party, such as Forget Student Debt. 

Also, recent Public Service Loan Forgiveness changes and updates indicate that this program has a 99% rejection rate. Out of 100,000 applicants, only around 1500 could successfully finalize the process and get forgiveness. Among the main reasons are missing information, non-qualifying payments, loans, or dates. These statistics indicate that most borrowers do not understand the eligibility and application process fully. Therefore, Forget Student Debt helps debtors to go through the process successfully. We offer you the help and guidance that you need. If you have a chance to get rid of the debts, we help you to get it done. 

Benefits of Public Service Loan Forgiveness Program

PSLF is one of the ways to get rid of student loan debt, which is the most crucial benefit. However, it also has some superior characteristics compared to other debt relief programs.

  • Non-taxable income- when you get the help of the PSLF plan, your taxable income does not increase. In some forgiveness programs, Internal Revenue Service considers the amount of the debt that you get rid of as an income. Therefore, at the end of the year, when you declare the income, you must add this forgiven amount. As a result, you also pay additional taxes for that amount. Even worse, you must pay it all at once, in a lump sum amount, which weakens all the benefits of that forgiveness program. Luckily, in Public Service Loan Forgiveness, the forgiven amount is not taxable. 
  • No Consecutive Payment- You do not need to make 120 consecutive payments with PSLF. If you worked for a non-qualifying employer, it would not affect your status. 120 payment means at least ten years, and you do not need to stick with only qualifying employers just to be eligible. It is okay if you sometimes had a part-time job or worked with a private organization. In contrast, for example, in Teacher Loan Forgiveness, you must work five consecutive years. Any gap during this period will negatively affect your eligibility. Fortunately, in PSLF, only your total 120 payments matter, which you can accomplish in 10 years or 20. 
  • Opportunity for Part-time Workers- One of the criteria for eligibility is full-time work with a qualifying employer. However, if you are a part-time worker, you can still get forgiveness. Yet, to benefit from PSLF, you must work part-time with more than one qualifying employer. For instance, four hours-part time work with two employers will generate 40 hours per week. In this way, administrators will consider your work full-time, and you can apply for PSLF.
  • Temporary Chance for a Non-Qualifier- if the PSLF application gets rejected because some or all payments are made under a not-qualifying repayment plan, debtors can still get the forgiveness. Temporary Expanded Public Loan Forgiveness exists to distribute funds to people who do not qualify under the rules of PSLF. 

Eligibility

Several criteria exist to be eligible for the PSLF program. You should be working full time in a governmental or non-profit organization. Plus, you need to have a Direct Loan, which you made 120 eligible payments under a qualifying repayment plan. Each of the eligibility requirements needs a specific explanation as they bear complex definitions.

  1. Public Service Employment

Your eligibility does not depend on the specific tasks you are performing at the workplace; instead, the most crucial factor is your employer. If you are working in U.S federal, state, local, or tribal organizations, your job level does not matter. Alternatively, eligible debtors can work in a non-profit organization, but it should be tax-exempt. This exemption is checked based on the Internal Revenue Code (Section 501(c)(3). Generally, you should be an employee in U.S federal, state, and local government or tribal, non-profit organizations. Lastly, AmeriCorps and Peace Corps volunteers who serve full-time are eligible for PSLF. 

Please, do not confuse public service with similar non-eligible organizations, such as Labor unions, partisan political organizations, and for-profit government contractors. 

Notes for Contractors

The eligibility criteria for contractors can be a little confusing. As said before, if for-profit government contractors do not qualify for the Public Loan Forgiveness program. Let’s say you work in an organization that operates under a contract with an eligible employer. In this case, what matters is your employer’s qualifications, which do not qualify for PSLF. The fact that your organization works with a qualifying contractor does not determine your status. 

Notes for Non-profit Organization Employees

If you are working for a not-for-profit organization, you can be eligible for Public Service Loan Forgiveness. However, your organization should be tax-exempt. This exemption is granted under Section 501(c)(3) of the Internal Revenue Code. Yet, there is an exception to this rule. Even if your workplace is not tax-exempt, you can still be eligible. The reason is that some employers’ initial purpose is providing qualifying public service. You should also consider that this exception applies to a few cases which decrease your chance. 

  1. Full-time Work 

Another factor for eligibility was the type of work you perform for the agency or organization, which is full-time. In this section, let’s break down what the laws mean with a full-time job. To be considered as a full-time employee, you should work in one way from two possible scenarios: either your work hours meet the criteria of full-time which your employer sets, or you work at least 30 hours per week. Between these two options, the greater one will matter. For instance, if your employer defines full-time work as 40 hours per week, the alternative – at least 30 hours- would not work. It means, if you are working for 35 hours, it will not make you eligible for PSLF.

Notes for Part-Time Employees

If you work part-time, do not lose your hope. There is still a chance for you to get forgiveness. However, you need to work for several organizations. It means, the law allows eligibility of part-time workers, if they work for more than one qualifying employer. Plus, their total work hours for all qualifying employers should be at least 30 hours per week. For instance, if you work in two qualifying agencies for 15 hours per work, in total, you work 30 hours per week. In this case, you will be eligible for the full-time work criteria. 

Notes for Non-Profit Organization Employees

The eligibility criteria for full-time work might not consider the time you spend on worship services, religious instruction, or proselytizing. Therefore, to ensure your eligibility, it is better to ask for expert help. 

  1. Direct Loans 

Only direct loans are qualifying for the Public Service Loan Forgiveness program. If you got a loan with the William D. Ford Federal Direct Loan (Direct Loan) program, you sure would be qualified. However, loans from private lenders and some types of federal student loans such as the Federal Family Education Loan (FFEL) or the Federal Perkins Loan (Perkins Loan) are not eligible for Public Service Loan Forgiveness. Yet, you can get the benefit of forgiveness program, if you consolidate other federal loans into a Direct Consolidation Loan.

Another element also exists- 120 qualifying payments. In case of a consolidation, only the payments you make after the consolidation will matter for 120 payments requirements. The payments before consolidation will not count. 

  1. Eligible Payment

What do we mean by 120 qualifying payments? There are some additional requirements for making payments qualifying.

  1. Time matters. Payments you made before Oct.1, 2007, will not matter. Only the amounts you paid after that period can qualify for Public Service Loan Forgiveness.
  2. Borrowers should make payments under a qualifying repayment plan. It includes all repayment plans that are based on income- Income-Driven Repayment plans (IDR). On the other hand, the Graduated, Extended, or Alternative Repayment Plan, as well as the Standard Repayment Plan for Direct Consolidation Loans, are not eligible for PSLF program. Yet, if you have a 10 -year Standard Repayment Plan, do not worry. Your loan can still be eligible, but you need to change the repayment plan to an IDR program. However, also consider that changing to IDR can increase your payment depending on the income and debt amount. Hence, if you do not want to pay a higher amount, you might not consider the PSLF program at all.
  3. You should pay the full amount shown on the bill. Note: You will not be qualified sooner if you make higher repayments than required. The process only considers the number of successful payments, not the amount. Hence, you will get only one credit, whether you pay more or not. Still, if you want to pay more, contact your servicer. You should ask him/her not to apply additional payment for future payments. Otherwise, you will end up paying faster, and you will not get any credit for the month that you had no payment due. 
  4. Payment time should be during the 15 days after the due date when you work full time for a qualifying employer. Therefore, your payments will not be eligible if you are not required to pay at all. For instance, if you are still studying, in the grace period, deferment or forbearance.

Please, also note that 120 payments do not need to be consecutive. It means, even if you have a period of working for a non-qualifying employer, your prior payments will still count. 

Notes for AmeriCorps and the Peace Corps Volunteers

Payment eligibility has special rules for volunteers of AmeriCorps and Peace Corps volunteers. You can utilize your Segal Education Award or Peace Corps transition payment. In this way, you will make a single payment, which is a lump-sum amount of 12 qualifying payments. Plus, if the U.S Department of Defense makes lump-sum payments for you under the student loan repayment program, you can even get more credits for one Public Service Loan Forgiveness payment. 

Important: making 120 payments require at least ten years. During this period, rules and conditions can change. For instance, you can change your employer. In this case, you need to make sure that you are still on the right track for payments, which will officials evaluate for the PSLF program. Also, keep in mind that you might not submit this form periodically. However, when you apply for forgiveness, it will be mandatory to submit this form for every employer that you worked with during 120 monthly payments.

Therefore, it is better to submit an Employment Certification Form annually or when you change the workplace. As a result, you will get information about proper payments and detect any issues as early as possible. 

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Application to Public Service Loan Forgiveness

After you have made 120 successful payments that satisfy eligibility criteria, it is time to apply for Public Service Loan Forgiveness. However, during the time of application and forgiveness, you must continue working for a qualifying employer. If you satisfy this criterion, you can fill out the PSLF application. 

There exist two ways of application filling. On the one hand, you can utilize the PSLF Help Tool, which will guide you through application. All you need to do is input the required information. Then, you will get a printable form and put your signature. Plus, you should ask your employer to sign the partially completed form. Alternatively, you can simply download the PSLF application form and manually fill all required information.

Whether you get the help of the PSLF Help Tool or complete all sections by yourself, as a next step, you must send it to FedLoan Servicing. Again, two ways are possible. You either send the form with Employment Certification by mail to the address of FedLoan Servicing or fax it. 

Note: FedLoan Servicing is a federal loan servicer that administers the PSLF program. If it is your loan servicer, you can also upload the PSLF application form on their website. 

What is Employment Certification?

Employment Certification is a form to keep track of your progress. The conditions of eligibility for PSLF can be confusing. If you are not sure whether you make the right moves, this certification will be your guide. You need to download this form, fill it, and submit. After that, you will get the confirmation of qualifying employment and eligibility of your payments.

In general, people submit this certificate annually. However, more frequent submissions will help you detect any issues that divert you from the path of PSLF immediately. Also, Employment Certification is not mandatory during the repayment period. It is an optional help for you to remain organized. Yet, when you finalize 120 payments, and it is time to apply PSLF, you must submit individual forms for each qualifying employer you worked for during the time of repayment. Therefore, it is easier to provide the form throughout the process as collecting all necessary information about the employer later can be challenging. 

Approval

In case you met all eligibility criteria and made 120 qualifying payments, your application will be approved. If so, you will get a notification that all outstanding balance of your debt is forgiven. It is also possible that you made more than 120 successful payments. In such a case, you will get back all the additional payments. 

But what happens if you get rejected? Public Service Loan Forgiveness gives a second chance to people who failed because of the criteria of 120 qualifying payments. If you missed some part of payments or you made incorrect payments, you can still apply for a Temporary Expanded PSLF plan. 

Temporary Expanded Public Service Loan Forgiveness (TEPSLF)

One of the positive Public Service Loan Forgiveness changes happened in 2018. Consolidated Appropriations Act started offering a limited chance for people whose PSLF applications were unsuccessful because of non-qualifying payments. To be considered, you need to contact the US Department of Education (ED) via email and send out a request for TEPSLF. The Department of Education has created an expanded list of eligible repayments. Therefore, even if some or all of your payments do not qualify with PSLF, they can count for TEPSLF. Even better, if you paid the loan debt back with the non-qualifying repayment plans of PSLF, you can get the benefits of TEPSLF. Those repayment plans are the Graduated, Extended, Consolidation Standard, and Consolidation Graduated Repayment Plans.

Important: In case you think you qualify for the Temporary Expanded Public Service Loan Forgiveness, you should act immediately. As its name suggests, this program is temporary, and it provides limited funding. It exists till all the funds end. Plus, they can distribute the funds based on a first-come, first-serve basis. Hence, send a request to your ED as soon as possible.

Eligibility for TEPSLF

The eligibility criteria for TEPSLF is similar to PSLF with slight changes. The requirements for qualifying payment type, such as date and amount of payment, still holds. However, the changes are the following:

  • You should submit the PSLF application and get rejected because some or all of the payments weren’t based on qualifying repayment plan of PSLF prior applying to TEPSLF
  • You have worked full-time for ten years for a qualifying employer, and FedLoan Servicing approved it
  • The amount of the payment made 12 months earlier, and the last payment before applying to TEPSLF are at least as much as you pay under IDR (Income-Driven Repayment) plan
  • You made 120 successful payments that qualify for new rules of TEPSLF during the work for an eligible employer

Please, consider that there is no requirement to wait for rejection before submitting your request for the Temporary Expanded Public Service Loan Forgiveness. 

Additional Requirements

  • It is possible that if you did not make payments with Income-Driven Repayment Plans, you would need to submit more information. For instance, they might ask you to provide information about your income and family size. Department of Education and FedLoan Servicing need this data to decide how much you would have paid under the IDR plan. To be eligible, your last and 12 months prior payment should be at least as much as the monthly payment amount under the IDR plan with your information.

Note that you will get a notice that they request you submit additional information. In this case, you should upload documentation online. Alternatively, you can also contact FedLoan Servicing or a third party expert like Forget Student Debt to guide you. Do not forget; you only have 21 days to submit the necessary documents. Otherwise, ED can cancel your request for Temporary Expanded PSLF.

Which do Loans qualify for TEPSLF?

While only Direct Loans qualify, defaulted Direct Loans or Direct PLUS Loans of parent borrower are not eligible for TEPSLF. Besides, similar to Public Service Loan Forgiveness, Federal Family Education Loan, Federal Perkins Loan, or private loans are still non-qualifying events for temporary expanded offer. However, different from PSLF, if you made payments with the Extended, Graduated, Consolidation Standard, and Consolidation Graduation Repayment plans, you have an excellent opportunity to apply to TEPSLF. 

Application to TEPSLF

Different from Public Service Loan Forgiveness, application to TEPSLF is relatively straightforward. If you think your conditions satisfy the requirements of this program, you should notify your Department of Education. Therefore, all you need to do is send an email to FedLoan Servicing to urge them to request your application to ED. For the email, do not forget to add your birth date and use the same name that you previously used for PSLF. 

If the assessment of the ED is positive, you will get a notification that you got the forgiveness. In contrast, in the case of negative evaluation, you will again get the details of ineligibility reasons. After rejection, you will continue repaying the debt based on the conditions of Master Promissory Note. 

Apply for Student Loan Forgiveness Help

If you struggle with university student loan forgiveness, then you should get help with that. Because the employees in these agencies are dealing with the student loans every day and they have enough experience for solving different kinds of student loan problems.

PSLF Updates, News & Analysis

This section is prepared to get out of the theoretical explanation of the PSLF program. We aim to show you the reality and challenges of PSLF through Public Service Loan Forgiveness changes and updates. 

99% Rejection Rate

This loan forgiveness looks like a dream. Who does not want the government to erase all the remaining debt? As attractive as it might seem, PSLF is also very challenging to get. In 2019 there was a Public Service Loan Forgiveness Update that only 1% of applicants got approval for forgiveness. In other words, the US Department of Education acknowledged that out of 100.000 applicants, only around 1500 could successfully pass the requirements while others are still in the review or failed. 

But why do borrowers get rejected? A Federal Student Aid representative mentioned in Congressional hearing that the reason was complexity and timing. Previously, in eligibility criteria, it was said that the program considers only payments made after 2007 October. Therefore, almost 80% of applicants have not finished the requirement 120 monthly payment period. They believe, as time passes, more applicants will become eligible.

Another reason for rejection is the non-qualifying loan type. Only Direct loans qualify for this program. This Public Service Loan Forgiveness update indicates that they rejected around two-thirds of applications for this cause. 

Also, the Department of Education agreed that they understand applicants need more guidance and help as they do not understand the requirements. While the department thinks they should provide more assistance, people who get forgiveness have different opinions. They mentioned that application to PSLF is a burdensome process that takes a lot of time and energy. Therefore, the program does not help people who need it most; instead, it benefits people who have enough free time and patience to get through all the documentation process. 

2020 Budget Proposal and Elimination of PSLF

Another Public Service Loan Forgiveness update is about the 2020 budget plan. The Trump administration proposed a new budget plan for 2020 in March 2019. Though this plan boosted the amount allocated for spending, student aids do not get many shares. There are even proposed negative Public Service Loan Forgiveness changes that aim to cancel this program. However, do not worry immediately. It is not the first time that the Trump administration proposes this elimination. As it was not approved last year, there is a reasonably high chance that PSLF will continue operating. 

Expansion of PSLF

Speaking of Public Service Loan Forgiveness changes, it is also necessary to mention a PSLF expansion. In March 2018, Congress passed a bill to qualify borrowers to forgiveness even if they did not meet the eligibility requirements about repayment plans. Under the expansion, now people who have a non-Income Based Repayment plan will also be eligible for PSLF forgiveness. 

One of the reasons for this positive Public Service Loan Forgiveness update was the misconduct of shady Loan Servicers. They convinced borrowers that repayment plans other than Income-Driven would work just fine for PSLF. As a result, many people made payments for a long time that did not qualify for this forgiveness program. With the help of expanded PSLF, it will be possible for them to get the benefit of forgiveness. 

Your last payment and payment made 12 months prior should be as high as your Income-Driven repayment plan to qualify. Sure, you did not have any Income-driven repayment plan. The officials estimate this hypothetical amount by getting your income and family size information. In other words, they calculate how much you would have paid if you had an IDR plan. Then, they compare that amount with your actual last month and 12 months prior payment. Your actual payments should be as high as IDR payment to be eligible.

However, people who want to apply for the Temporary Expanded Public Loan Forgiveness plan should be fast. As funds are limited – $350 million- this deal stays until the fund end. Therefore, the system works with a first-come, first-served basis. 

Get a Help

To explain the requirements and application process of the PSLF program takes a long time. You can get rid of paying a debt worth thousands of dollars with this plan. Therefore, you cannot expect that such a beneficial program for you will come without its costs. By cost, we mean time, effort, stress, and high probability of making a mistake. As seen from the recent Public Service Loan Forgiveness update, only 1% of people were successful in getting forgiveness. The ones who were lucky mentioned that Public Service Loan Forgiveness worked for them because they invested energy and a lot of time to manage all of its aspects. However, you might be busy with your work, miss details of eligibility, or get stressed-out. We offer you a chance to skip those costs. Let us guide you through this path full of obstacles and ensure you receive what you deserve.