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Understanding Public Service Loan Forgiveness (PSLF)

Published August 16, 2022

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Student Loan Repayment
Article

Recently, the Education Department sent millions of student loan borrowers an email urging them to check their eligibility for the Public Service Loan Forgiveness program, or PSLF.

PSLF is a U.S. government program that allows borrowers employed at non-profits and government entities to have their Federal Direct Loans forgiven after ten years of repayment under the Income-Driven Repayment (IDR) plan (120 payments total).

Who is eligible for PSLF?

Healthcare professionals such as nurses, doctors, and other HCPS who work in public hospitals often qualify for the program. Many teachers , first-responders, and military members may also qualify. To be eligible for the program, you must:

  • be employed by a non-profit (must be tax-exempt under Section 501(c)(3) of the Internal Revenue Code) OR a U.S. government organization at any level (federal, state, local, or tribal) – including U.S. military service.
  • work full-time for that agency or organization
  • have Federal Direct Loans (or consolidate other federal student loans into a Direct Loan)
  • be enrolled in an income-driven repayment (IDR) plan
  • make 120 qualifying payments

It is important to note that PSLF is not available for private loans. Also note that while on an income-driven repayment plan, you should avoid refinancing your loans as it creates a new debt, terminating your eligibility for forgiveness. To learn more, visit studentaid.gov. Not sure if you qualify for loan forgiveness? To learn more about your options, you can also set up a free consultation with our loan forgiveness specialists at GradFin.

How GradFin’s experts can help you navigate PSLF

To help nurses, doctors, and healthcare professionals navigate the complexity of PSLF and student loan repayment, Laurel Road members can now take advantage of student loan counseling through GradFin. Recently acquired by Laurel Road, GradFin offers members a free consultation with a student loan expert to help identify their student loan options – whether that’s refinancing or seeking Public Student Loan Forgiveness (PSLF), or a combination of both. Working with GradFin can help professionals in healthcare and public service make informed decisions about managing their loans and repaying them faster, qualifying for PSLF, and achieving their financial goals.

What is the limited PSLF waiver?

In 2021, the limited PSLF was enacted to help public service workers like nurses and doctors, as well as veterans, teachers, and police officers get closer to loan forgiveness. Depending on your employment type, the limited waiver may make it easier for healthcare professionals like you to benefit from these programs. The limited PSLF waiver may:

  • Include periods of qualifying employment that didn’t previously count due to your loan types or repayment history
  • Allow you to seek forgiveness on older loan types by consolidating them into Direct Loans
  • Increase your total number of qualified payments

The waiver is designed to grant borrowers credit toward loan cancellation regardless of their federal loan type or if they had been enrolled in a specific payment plan, as long as they consolidated their debt into a Direct Loan before the end of the waiver. Specifically, the temporary waiver allows borrowers to get around the PSLF program’s rules and receive PSLF credit for all types of payments made on federal student loans, including:

  • Payments made toward loans made under the Federal Perkins and Federal Family Education Loan Programs.
  • Loan payments made under a non-qualifying repayment plan.
  • Late payments.
  • Past payments for less than the full amount.

For further details on the limited waiver, visit https://studentaid.gov/pslf-limited-waiver.

Misconceptions about PSLF

The PSLF program’s rules, complexity, and changes in the fluidity around the federal student loan forgiveness holiday have led to confusion and misconceptions.

One misconception is that borrowers need to “sign up” or “commit” to the program. While there is no application required to pursue PSLF, there is an Employment Certification Form (ECF) that borrowers must have filled out by each employer before they can qualify for the program and have their loans forgiven.

If you pursue PSLF, it’s recommended that you complete an ECF annually or whenever you change employers. While it’s been positioned as a “sign up” for PSLF, the reality is it just notifies the Department of Education that you’re planning on pursuing loan forgiveness. Submitting the ECF could also trigger a transfer of the loans to Fedloan Servicing. For more information, go to the Federal Student Aid website at StudentAid.gov/publicservice.

Taking advantage of PSLF

For healthcare and public service professionals in qualifying positions, The Public Service Loan Forgiveness Program (PSLF) is more accessible to students than ever before. To   learn more about federal loan repayment options and your options, contact us for a free consultation and read more here.

Sources:

  • StudentAid.gov/pslfwaiver
  • https://www.tateesq.com/learn/pslf-waiver
  • https://studentaid.gov/articles/take-advantage-pslf-waiver/
  • https://www.laurelroad.com/refinance-student-loans/federal-student-loan-repayment-programs-an-overview/

 

In providing this information, neither Laurel Road nor KeyBank nor its affiliates are acting as your agent or is offering any tax, financial, accounting, or legal advice.

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