Many people remain uncertain about whether or not their student loan debts will be discharged through the newly updated PSLF policies. Well, rest assured there are many individuals who will qualify under these revised policies— just look at how many thousands of individuals will qualify.
Prior to being able to celebrate your newly forgiven debts, please be sure to review the recent changes to the PSLF program, who qualifies for the program, and all required tasks/steps you must complete prior to the program closing its doors for good.
What is the PSLF program?
The PSLF program (Public Service Loan Forgiveness PSLF), was created by U.S. Congress in 2007. The premise is straightforward:
Full-time work in public service ➜ Complete 120 qualifying payments ➜ Any remaining balance of all of your eligible federal loans will be eliminated.
Prior to this legislation, Teachers, Nurses, Military personnel, employees of Non-Profit Organizations, and Government Employees were specifically mentioned in this legislation when discussing who qualified for the PSLF program. However, due to the overly strict guidelines associated with qualifying for forgiveness under PSLF, many individuals have been denied forgiveness based upon minor compliance issues.
Recently, however, this same department has decided to completely rework the policies governing the PSLF program, and not in a gradual or step-wise fashion as you may imagine. Rather, it has taken the approach of implementing everything at once! As a result, the following additional student loan types now qualify under PSLF:
- Additional Loan Types Have Now Been Added to the Qualifiers – FINALLY
Many people who are currently making payments on their Federal Family Education Loans (FFEL) will now qualify for forgiveness through the PSLF program, as well as Perkins Loans. What’s more, even previous payments (i.e. those made years ago) towards these two types of loans will all now qualify as eligible for forgiveness under the PSLF program.
The only remaining unqualified type of student loan remains Private Student Loans, meaning they will remain completely useless to anyone that has been trying to obtain forgiveness from the PSLF program for their Private Student Loans.
The 120-Payment Rule received an important update
In the past, a borrower could have their loan payments made late, made a few cents short of what was owed, or used an incorrect payment plan without being eligible for a PSLF forgiveness benefit.
The new guidelines are much more forgiving and recognize that people are human:
- Late payments count.
- Underpayments count.
- ALL repayment plans count.
- Payments made prior to consolidation count.
The Department of Education appears to recognize that people lead busy lives.
Military Borrowers Receive Long-Overdue Benefits
As a member of the military, any time you were on active duty, your educational loans were often placed in deferment or forbearance. This means you were not accumulating payments toward your PSLF benefit during the months in which you were in deferment or forbearance.
Under the new guidelines, however, these months will automatically be counted as if you had made the required payments.
To streamline the process, federal agencies are aligning their employment and loan data systems so that service members will no longer need to manage their own data tracking.
You are provided with a four-step survival kit:
Consolidate your FFEL and Perkins loans into a Direct Consolidation Loan.
Don’t worry; consolidating your loans will not reset your progress toward PSLF eligibility.
Step 2: Submit your PSLF Form Before the Deadline
This is not up for discussion. Your PSLF Form should be submitted no later than October 31, 2022.
Submitting your PSLF Form is how you will certify all your newly eligible payments.
If you do not submit your PSLF Form by the deadline, then your previously made payments will not count toward any future PSLF eligibility.
Step 3: Update Your Contact Information
Ensure that both The Department of Education and Your Loan Servicer have accurate contact information on file.
Do not let your Approval Letter get sent to your previous residence where you have since moved three times.
Step 4: Let Someone Know
Many people do not know about these changes and many people keep their student loans on autopilot. They could possibly lose out on a substantial amount of loan forgiveness because no one told them about these changes.
Returning to the Original Question on Your Mind
Will my loans be forgiven under the PSLF changes?
If you work in a public service position, if you made any payments, if your loans are “old”, if you had one or more late payments, if you served in the military, or if you consolidated before this change, then yes, it is very possible.
The expansion is not small, it is HUGE. And it may never happen again.
The PSLF changes are something we rarely see, as they make things simpler, rather than more complicated.
If you have missed payments, made partial payments, had a break in payments, or used an incorrect payment plan, take this opportunity to take years of debt off your credit report.
Do not procrastinate.
Do not think you might not qualify for this program.
Review your account, submit an application, upload any missing documents, and then start celebrating!
