Full student loan forgiveness might be closer than you think under the temporary Civil Service Loan Forgiveness Rules, or PSLF – but time is running out to apply.
“They should be rushing to get this done because the program is much more inclusive than it has ever been in the past,” says Kristen Ahlenius, Certified Financial Advisor and Director of Education at Your Money Line, a financial wellness business.
Payment requirements for the program are more lenient under a limited waiver that expires October 31. Prior to the waiver, Ahlenius said, “The PSLF was kind of this rejected program for so long because it was so unworkable.”
The basic requirements for the PSLF are working for an eligible public service employer, making 120 student loan payments, and having direct federal loans. But the program has many caveats, which has led to approval rates below 2% and angry, confused borrowers.
“People thought they were on the right track and submitted their application to get a rejection,” says Betsy Mayotte, president and founder of the Institute of Student Loan Counselors. “In particular, it happened to people who had the wrong type of loan and people who were on the wrong payment schedule.”
In addition to having direct loans, borrowers must make payments under an income-driven repayment plan to qualify.
The PSLF derogation respond to these criticisms. It counts more time for the required 120 months, including hardship deferment periods, months with late payments, and months not enrolled in income-contingent repayment. It also opens the door to borrowers with loans from the Federal Family Education Loan Program, or FFELP.
Here’s who should apply now and how.
Who should apply now
Current and former public service workers
Your sector of activity is the key criterion for the PSLF derogation. Your time with an eligible employer must coincide with when your student loans were in repayment.
These types of jobs are generally eligible:
- Federal jobs.
- State government jobs.
- Local government jobs.
- Tribal government jobs.
- Non-profit organization jobs.
- Military service.
Your employer is what matters, not what you do. Payments will not count if you work for a private employer, as a government contractor, or part-time. Parent PLUS Loans and Joint Spouse Consolidation Loans also do not qualify, regardless of your job.
Check the PSLF employer search tool to make sure your job qualifies. “You might be closer than you think,” Ahlenius said.
FFELP loans are normally not eligible for the PSLF. However, if you first consolidate your FFELP loans into a direct loan, your previous payments will count towards the forgiveness – thanks to the waiver.
Terms of employment still apply.
Previously rejected candidates
If you have been denied PSLF in the past, you may receive additional months towards the 120 needed for forgiveness under the waiver.
The Department of Education said it is reassessing previously denied PSLF claims and will contact borrowers whose accredited time is adjusted.
“If you haven’t heard anything, you absolutely have to submit again,” says Mayotte.
How to register
The PSLF exemption request only involves a few steps:
- To connect to studentaid.gov to make sure you have direct loans.
- Consolidate if you don’t have direct loans.
- Complete your employer attestation form(s) with required signatures dated October 31.
- Submit the form(s) to the Education Department.
You must complete a separate Employer Certification Form for each qualifying job. Using the PSLF help tool, available at studentaid.gov/pslfinstead of the paper form can simplify the process and help prevent errors.
“Anyone who has a full-time job stint with a government employer, any 501(c)(3), you have nothing to lose and everything to potentially gain,” Mayotte says.