The Public Service Loan Forgiveness Program (PLSF) helps qualified applicants acquire cancellation on student loans by working full-time for a qualifying employer and meeting other program requirements.
It was established back in 2007 by President George W.Bush as part of the College Cost Reduction and Access Act (CCRAA), the Public Service Loan (PLSF) Program wants professionals with student loan debt to pick full-time jobs in public service in order to have their loans forgiven totally.
Public Service Loan Forgiveness News
As earlier stated, the PSLF started in 2007, meaning the first batch of borrowers became eligible for relief in 2017.
However less than one percent of borrowers who have applied for PSLF have had their loans discharged as of June 2019, according to data from the Department of Education. The numbers below are cumulative.
|Public Service Loan Forgiveness Program Data||As of 9/30/2018||As of 12/31/2018||As of 3/31/2019||As of 6/30/2019|
|Borrowers submitting applications||41,221||53,749||73,554||90,962|
|Total applications submitted||49,669||65,500||86,006||110,729|
|Status of processed applications|
|Approved by PSLF servicer||423||610||864||1,216|
|Denied for not meeting program requirements||32,409||42,560||56,353||74,618|
|Denied for missing information||11,892||15,123||18,785||24,200|
|Status of loan discharge|
|Borrowers with discharges processed||206||338||518||845|
|Dollar value of loans discharged (in millions)||$12.32||$21.13||$30.68||$52.05|
How to Qualify for the Public Service Loan Forgiveness (PSLF) Program
Before doing the PSLF application, you’d need to finish a few important steps to determine your eligibility.
Employer Requirements for PSLF
This is the first requirement for the Loan forgiveness of the Public service program – work full-time at a government agency, which includes local, State, federal or tribal organizations. Full-time employees of of IRS-approved 501(c)(3) non-profit organizations are also eligible for the program.
While full-time Peace Corps and AmeriCorps volunteers are also said to be considered eligible for the PSLF Program, employees of labor unions, partisan political organizations, labor unions, for-profit organizations, and non-profits bodies are not recognized as a 501(c)(3) organizations don’t currently qualify.
The Department of Education (DOE) considers full-time employment working a minimal of 30 hours per week for a qualifying employer, or whatever is defined by your employer as full-time. Aside these, doing more than one part-time job at a qualifying employer can also help you qualify, as long as you work more than 30 hours per week between the two jobs.
Loan Requirements for PSLF
This section talks about the determination of your eligibility for the PSLF program by understanding which loan types is covered by the program. As of now, only Direct Loans qualify for the Public service Loan Forgiveness for teachers.
- Direct Subsidized Loans
- Direct PLUS Loans (for qualified parents)
- Direct Consolidation Loans
- Direct Unsubsidized Loans
Note: These loans only qualify if they aren’t presently in default. If you have defaulted loans that qualify for PSLF and you’d like to take advantage of the program, we can help you get out of default and switch your loans to a more favorable income-driven repayment plan.
Income-driven repayment plans include:
- Pay As You Earn (PAYE) Plan
- Revised Pay As You Earn (REPAYE) Plan
- Income-Based Repayment (IBR) Plan
- Income-Contingent Repayment (ICR) Plan
Borrowers of other federal student loan programs, which include Federal Perkins Loans and Federal Family Education Loans (FEEL) aren’t eligible for the PSLF Program. But, if these loans are said to be into a Direct Consolidation Loan, they may be eligible for the PSLF Program.
Loan Payment Requirements for PSLF
As part of your eligibility for the Public Service Loan Forgiveness Program, you’ll also need to ensure your payments qualify you for forgiveness.
Aside having eligible loans, you’ll need to make 120 qualifying payments on these loans while working for a qualified employer. These payments must also have been made after October 1, 2007, which is the date the program officially launched.
Payments on your loans don’t need to be consecutive, meaning you won’t lose credit towards your 120 qualifying payments per month while working for a non-qualifying employer.
If you’ve consolidated your loans or converted your loans into an income-driven repayment plan, only 120 payments made on the new qualifying loan is said to be part of the program’s repayment period.
Are you set to take the bold next step? Get a free consultation with our experts to find out if you’re eligible for the Public Service Loan Forgiveness (PSLF) Program.
How the Public Service Loan Forgiveness (PSLF) Program Works
The Public Service Loan Forgiveness Program (PSLF) is created to forgo the remainder of your qualifying student debt, up to any amount left, as far as you meet the conditions of the program. But, even if you meet all the requirements for the PSLF Program, the earliest you could have your student loans forgiven is October 2017, as a result of the mandatory 10-year repayment timeframe that starts after October 1, 2007.
An extra advantage of getting approved for the PSLF Program, beyond having your student loan debt forgiven, is that the amount forgiven will not be considered taxable income by the IRS. This means that even if your Public service loan forgiveness application is approved and your loans are forgotten, you won’t need to file the forgiven amount on your taxes.
The PSLF Program under President Trump
Ever since President Donald Trump took office, the Public Service Loan Forgiveness program has become a controversial topic. One of the core reasons for the controversy is Trump’s opinion that destroying the PSLF Program could save taxpayers anywhere between $100 to $200 billion annually.
But, the White House made a surprising move in March 2018 when President Trump signed the $1.3 trillion omnibus spending bill – a bill that gives $350 million in funding to the PSLF program over the next several years.
With the program now funded for several futures ahead, eligible applicants can now begin submitting paperwork for Public Service Loan Forgiveness Form. This includes borrowers who work for qualifying agencies and have graduated or extended repayment plans. Before the bill was signed, only applicants with income-driven repayment plans qualified for the program.
TEPSLF is Launched
In May 2018, the DOE (Department of Education) kick-started a new program known as Temporary Expanded Public Service Loan Forgiveness (TEPSLF). Using a portion of the $350 million in funding for PSLF, this program helps borrowers whose applications were denied for PSLF due to ineligible loan types.
If you had your application denied when you applied to the PSLF program because you didn’t qualify, you could be eligible for TEPSLF. Funding for TEPSLF isn’t expected to last very long, so it’s crucial to submit your new application as soon as possible to be reconsidered.
Aim Higher Act is introduced
House Democrats invented a new means aimed at protecting low- and middle-income student loan borrowers. As part of the proposal, Democrats hope to protect the PSLF from repeal and grow it to include more eligible loan types and applicants, and make the process of obtaining and repaying loans simpler. The bill is still waiting to be voted on before moving to the Senate.
Don’t qualify for PSLF? You have other options
You need not be sad if you don’t meet the PSLF’s strict requirements. There are also loads of other options to pick from:
- Explore other paths to forgiveness. PSLF isn’t the only federal student loan forgiveness program, although it’s one of the most applied for. But, watch out for loan forgiveness scams.
- Consider refinancing. Student loan refinancing can save you loads of $$$ and help you become debt-free faster by lowering your interest rate. But, once you refinance federal loans, they’re no longer eligible for income-driven repayment or forgiveness programs. You need stable finances and good credit to qualify.
- Stay on income-driven repayment. All 4 income-driven plans will forgive your remaining balance after 20 or 25 years, depending on the plan. But, unlike with PSLF, the forgiven amount is taxable.
If your Public Service Loan Forgiveness application (PSLF) was denied, you may be eligible to receive loan cancellation under the Temporary Expanded Public Service Loan Forgiveness (TEPSLF) opportunity.
As part of this opportunity, the Department of Education reconsiders your eligibility using an expanded list of qualifying repayment plans.
This TEPSLF opportunity is not permanent, has limited funding, and will be provided on a first come, first served basis. Once all of the funds are used, the TEPSLF opportunity will end.
2019 Update on PSLF
In 2019, March to be precise, President Trump released his 2020 education budget with his sights on the PSLF Program once again. The budget proposed big changes to some loan programs, including PSLF, that President Trump plans to repeal for certain loan types and qualified borrowers.
If this new budget proposal is approved, borrowers who haven’t already enrolled in school won’t be granted access to PSLF. What’s more, the budget would eradicate Subsidized and Perkins loans from being eligible for the programpublic .
One of the more evident changes, however, is how this budget would affect income-driven repayment plans. According to the budget, the Trump administration would replace these programs with a single income-driven program that offers a 30-year repayment timeframe. Undergraduates under this plan would earn loan forgiveness after making 15 years of qualifying payments, while graduates would need 30 years to obtain debt forgiveness.
These programs work on a “first-come, first-served” basis, making it important to submit your application as soon as possible. For more details on debt forgiveness through the TEPLF or PSLF programs, fill out our form or get in touch with our experts ON HERE.