It's been eight months since the first wave of individuals could apply to have their loans wiped away under the Public Service Loan Forgiveness (PSLF) program. It was impossible to qualify prior to October 2017. Over that time there has been a handful of stories about borrowers who have successfully had their loans completely forgiven and stricken from record. In comparison, there have been buckets full of stories about people who thought they met the requirements but ultimately did not and were denied.
I believe many, if not most, of the rejected individuals were denied due to misunderstanding the rules and a subsequent lack of strict adherence to them.
However, some borrowers were flat out misled by wrong information provided by their servicers; in recent months, I’ve been a firsthand witness to borrowers receiving bad information. This seemed to be more widespread in the early years of the program.
Believe it or not, the government has responded to this issue. In this year’s appropriation act, they designated $350-million for the purpose of forgiving loans under new parameters. This money will be doled out on a first come, first served basis. The Department of Education is calling this program the Temporary Expanded Public Service Loan Forgiveness (TEPSLF). Once the $350-million is used up, the program is expected to be shut down. Stay tuned to learn more about this limited-time offer!
Here's what SLPs really need to know:
Since this is an extended version of the regular PSLF program, it’s not surprising that there’s a big overlap in what’s required to take advantage of it. You still need to have worked a cumulative (not consecutive) ten years at a qualifying public service employer. You must have also made 120 qualifying payments to your loans during that time period. Those ten years of service and payments need to have occurred after October 2007. At the time of forgiveness, meaning when you request consideration for TEPSLF up until the point where the loans are actually wiped away, you need to maintain full-time employment at a qualifying employer.
So, what sets TEPSLF apart? Three major points:
An expanded definition of a "qualifying" payment.
The regular PSLF program required payments be made under an Income-Driven Repayment Plan(IDR) to qualify. With the expanded definition, past payments made under the following plans will be counted as well:
· Graduated Repayment Plan
· Extended Repayment Plan
· Consolidation Standard Repayment Plan
· Consolidation Graduated Repayment Plan.
The payment twelve months prior to applying for TEPSLF and the last payment you made before applying for TEPSLF must be equal to or more than your payment under an income-driven repayment plan.
There's a reason the regular PSLF program required payments be made under an Income-Driven Repayment Plan (this cheat sheet breaks down all the plans). It's the key to trying to maintain a balanced program and limiting forgiveness for high-income earners.
The non-IDR payment plans (listed above) that TEPSLF now allows are not tied to income. They are based solely on loan balance and a set repayment term. This could lead to some unwanted outcomes, so this is what lawmakers are really saying:
We know that some people likely got screwed due to lack of communication or misinformation during the early years of PSLF. They believed they were on the right repayment plan but they actually weren't. We want to help but don't want to screw ourselves either. So, we have to make sure your income is considered for at least some of your final payments.
Submit a complete PSLF Application and have it denied solely because some or all your payments were made under one of the non-IDR repayment plans mentioned above
This boils down to one implication: You must have already completed 120 payments and ten years of qualified employment.
In action, this means an SLP who's been working at a public school for the last seven years and just recently discovered that three years of payments were made under the wrong plan cannot currently benefit from TEPSLF. That individual will be rejected due to not having completed ten years of qualifying employment.
In theory, this individual could apply for TEPSLF in three years upon completing ten years of employment, but I wouldn't bet on it existing by that time.
So who does this new program actually help? Let's look at an example.
Colbie the clinician starts a career as an SLP in the increasingly distant year of 2006. Through 2012, Colbie worked at non-profit hospital. Colbie, after years of working weekends, decided that was enough and made the switch to a public elementary school and continues to work there today. Unfortunately, when switching employers, she discovered that the payments she made the first six years were not under a qualifying plan.
This clinician has worked the required ten years at a qualifying employer and has made 120 student loan payments while doing so. However, let's look at Colbie's repayment plan history:
· (2006-2012) Payments were made under the Extended Repayment Plan
· (2012-2018) Payments were made under the Revised Pay As You Earn (REPAYE) Plan
So, even though Colbie has made 120 payments, only 48 of them were made under a PSLF qualifying plan. Since the payments made under the Extended Plan do not count under the standard PSLF rules, this clinician would still have six more years of payments until she could apply for forgiveness.
TEPSLF was made to help here. The new guidance under the TEPSLF program may allow for Colbie's payments made under the Extended Plan to qualify towards the 120 total payments. Colbie should submit a forgiveness application immediately to get the process started.
If your situation is similar to Colbie's, meaning you've made at least 120 payments towards your loans, have at least ten years of employment history at a qualifying employer, and continue to work at one today, take these steps:
1 Submit a PSLF Forgiveness Application right away
2 Wait patiently for 30ish days for it to be reviewed and ultimately denied
3 Confirm that it was denied solely because of unqualified payments
4 Send an email to TEPSLF@myfedloan.org requesting reconsideration
For more information on TEPLSF and what to include in that email visit the student aid site.
Want personal help? I exist to help SLPs own their finances, including student loans. Let's talk for 10-minutes, no strings attached. Pick a time.