Public Service Loan Forgiveness Qualifications
The Public Service Loan Forgiveness (PSLF) program was established in 2007. The program was designed to forgive the remaining balance of Direct Loans after the borrower made 120 qualifying monthly payments under a qualifying repayment plan while working full-time, for a qualifying employer. Forgiveness for those who enrolled in the program at its inception was to begin in 2017. However, many of these borrowers have recently learned that they were not enrolled in eligible repayment plans and therefore do not qualify for forgiveness.
The following link to a New York Times article describes some of the problems borrowers are experiencing: https://www.nytimes.com/2018/04/06/your-money/public-servants-student-loans.html
Under the PSLF, only loan payments made through one of the following four income-driven repayment plans are credited towards the required 120 payments:
- Revised Pay As You Earn Repayment Plan (REPAYE Plan)
- Pay As You Earn Repayment Plan (PAYE Plan)
- Income-Based Repayment Plan (IBR Plan)
- Income-Contingent Repayment Plan (ICR Plan)
A few weeks ago, a provision was included in the massive omnibus funding package (Consolidated Appropriations Act, 2018) to help individuals who erroneously believed they were enrolled in PSLF. AFSCME worked closely with Senators Chuck Schumer (D-NY) and Elizabeth Warren (D-MA) who led the effort to help these borrowers. The bill includes $350 million for the Department of Education to forgive student debts of borrowers who meet the requirements of the PSLF, except for their failure to enroll in an income-driven repayment plan.
Although $350 million seems like a lot of money, these funds will be distributed on a first-come first-serve basis and could run out quickly. The Department of Education is currently assessing the law and is expected to explain the new loan forgiveness conditions and how it will administer the fix by late May.
In the meantime, AFSCME members who have enrolled in PSFL should verify that they are satisfying all of the following program requirements:
- Qualified Loan: Only Federal Direct Loans are eligible for PSLF. However, borrowers who prior to July 1, 2010 received loans under other federal student loan programs, such as the Federal Family Education Loan (FFEL) program or the Federal Perkins Loan program may eligible for PSLF if they are consolidated into a Direct Consolidation Loan.
- Qualified Employment: Full-time (usually 30 hours per week) employment with the following types of organizations qualify for PSLF: 1) Government organizations at any level (federal, state, local, or tribal); 2) Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code; 3) 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; and AmeriCorps and Peace Corps. Employment with labor or partisan political organizations do not qualify for PSLF. Borrowers must recertify their employment annually by completing and submitting the Employment Certification for PSLF form annually, or when they change employers. Upon receipt the Department will review and advise the borrower whether their loans and employment qualify. The form is available on the Department of Education website: https://studentaid.ed.gov/sa/sites/default/files/public-service-employme...
- Qualified Repayment Plan: Qualified repayment plans are limited to the four income-driven repayment plans listed above. Qualified Monthly Payments: Payments qualify under PSLF if they are made: 1) after October 1, 2007; 2) under a qualifying repayment plan; 3) for the full amount due as shown on your bill; 4) no later than 15 days after your due date and 5) while the borrower is employed full-time by a qualifying employer. Payments do not need to be consecutive. If you have missed a payment, the next on-time payment you make will enable you to pick up where you left off. If you have missed a payment, you must make up that payment and any late charges. Once you are caught up on all missed payments, your future on-time payments count towards PSLF again.
Members can confirm the number of qualifying payments they have made by logging in to their account at: https://myfedloan.org/
In solidarity,
Sean Dannen
General Government Strategic Campaign Coordinator