There are new changes to PSLF, just announced yesterday!
If you’re like me and missed out on the PSLF situation, listen up—you might be eligible to participate now!
The federal government has temporarily changed the requirements for the PSLF program.
Old Rules:
-Only eligible loans are Direct Loans
-Must repay with a specific repayment program (IBR, REPAYE, PAYE)
-Loan payment must be the exact correct amount, on time, or did not count.
-Must be currently employed at a qualifying employer to get forgiveness
New (Temporary Rules):
-FFEL Program loans and Perkins Loans are now eligible—IF they are consolidated into a Direct Consolidation loan by October 31, 2022. (FFEL loans were made before 2010, and were called Stafford Loans.) You may be able to consolidate a previously consolidated federal loan in order to qualify for the PSLF program— just as long as the federal loans were not consolidated into private loans. THIS IS MAJOR!!
-Loans can be repaid under any repayment plan
-Payments that are not exact correct amounts, partial payments and late payments count
-Qualified employment rule is temporarily waived
-You don’t have to already be enrolled in PSLF—previous payments will retroactively apply, even though you weren’t in the PSLF program.
In order to qualify:
- Verify your loan types at studentaid.gov/aid-summary
- Consolidate your FFEL Program and/or Perkins loans into a Direct Consolidation loan by October 31, 2022
- Submit a PSLF form to loan servicer after your Direct Loan Consolidation is complete
If you don’t take action by Halloween ’22, this opportunity will turn into a pumpkin!
(Sorry, couldn’t resist)
Read the rules directly from the horse’s mouth here:
studentaid.gov/announcements-events/pslf-limited-waiver
WTF is the PSLF?
If you’re not familiar with PSLF, here’s a brief primer:
PSLF stands for Public Service Loan Forgiveness. This program was introduced October 1, 2007, to encourage folks with student loan debt to work in public sector jobs.
If you pay 120 loan payments (10 years’ worth), while working in a qualifying public sector job, then the remaining loan balance at the end of 120 payment would be forgiven. And the amount forgiven is not taxed!
For physicians who work at non-profit hospitals, or who are in the military, this is a great deal. The only problem was that it was a poorly managed plan, and many people who applied were unfairly disqualified due to this mismanagement. The rules were strict, and one misstep could result in disqualification. For example, each payment had to be on-time and the exact repayment amount. Repayments had to be made through a specific repayment plan: IBR, PAYE, REPAYE, and any private loan consolidation would make loans ineligible.
With this temporary waiver of old restrictions, those late or partial payments may now count. And payments made outside of the IBR, PAYE and REPAYE may count as well. Private consolidated loans are still off the table.
It’s worth checking to see if you qualify: studentaid.gov/announcements-events/pslf-limited-waiver
