by Kala Mueller
The Public Service Loan Forgiveness (PSLF) program was created under the College Cost Reduction and Access Act of 2007 in an effort to encourage more people to pursue a career in public service by offering a path to loan forgiveness. PSLF makes it more tenable for attorneys to work in lower-paying public interest jobs, but even after more than ten years, there continues to be a lot of confusion regarding program requirements. Below we’ll take a look at some of the criteria of the program, along with the current state of PSLF affairs. Although things may seem grim at the moment, there are reasons to be optimistic.
The Basics
If you are employed full-time with a qualifying employer after law school, you may be able to receive loan forgiveness under PSLF after you have made 120 qualifying payments toward your student loans. These payments do not have to be consecutive, so although moving in and out of public service or missing a payment will delay loan forgiveness, it won’t prevent you from being eligible.
Only Direct Loans can be forgiven under PSLF. Loans received under another federal student loan program can become eligible for forgiveness if you consolidate them into a Direct Consolidation Loan. However, it’s important to understand that if you consolidate your existing Direct Loans with other loans, you will lose credit for any qualifying PSLF payments you made on the Direct Loans before they were consolidated. In this situation, you may want to leave your existing Direct Loans out of the consolidation and consolidate only your other federal student loans.
In order to qualify for forgiveness, you must be enrolled in one of the income-driven repayment (IDR) plans. Fortunately, this is often the most logical choice for those pursuing forgiveness, as the IDR plans usually offer the lowest monthly payment option for a borrower.
If you are looking for more information regarding loan forgiveness, including qualifying employment and payments, eligible loans, etc., the office of Federal Student Aid provides a comprehensive PSLF Questions and Answers page.
The Good
The first cohort of borrowers became eligible for loan forgiveness in 2017, and as of June 2019 there is a group of applicants – 1,216 of them – who have been granted forgiveness. The percentage of overall applicants that this group represents is not high (more on that in a moment), but for now let’s just bask in the knowledge that it is happening for some people.
We know that some of the initial applicants were denied because they were on the wrong repayment plan. The good news for those individuals is that Congress set aside a $350 million fund under the Consolidated Appropriations Act of 2018 to offer PSLF to these borrowers. However, this opportunity, which the Department of Education is referring to as Temporary Expanded Public Service Loan Forgiveness (TEPSLF), is a one-time only expansion of PSLF. It will be provided on a first-come, first-served basis and only until funding runs out.
The Bad
Despite the important purpose that PSLF serves, its future is anything but certain. The President’s budget proposal for both 2019 and 2020 along with H.R. 4508, known as the PROSPER Act, proposed eliminating PSLF. There was also a proposal under the previous administration to cap forgiveness under PSLF at $57,500. Thankfully, none of these things have happened. If PSLF is important to you, I would encourage you to contact your senators and representatives and ask them to preserve the program and vote against any bill that would eliminate or cap PSLF.
The Ugly
Remember those 1,216 applicants who received loan forgiveness? Unfortunately, according to new data released in June 2019 by the Department of Education, they represent just over 1% of the applications processed for loan forgiveness. Yikes.
In October 2018, the Coalition to Preserve PSLF wrote a letter to the Secretary of Education that requested a breakdown of the reasons why so many applicants failed to qualify. Since that time, the Department has been providing more specific data on the reasons PSLF applications are being denied. The June 2019 report provided that of the 100,835 applications that were rejected, 55% lacked the requisite number of “qualifying payments,” 24% were “missing information,” and 15% had “no eligible loans.” Issues with dates of employment and ineligible employers accounted for the remaining 4% of rejections.
The Silver Lining
While, yes, the high rate of rejections is frustrating and a bit worrisome, a recent Forbes article provided some much-needed perspective. The author points out that because the Income-Based Repayment (IBR) plan wasn’t even offered until July 2009, “it may take a while for many applicants to make the 120 required payments on the right repayment plan.” He optimistically asserts that “it should be all uphill from here,” as kinks are being worked out and borrowers are becoming more educated.
At this point, submitting an Employment Certification Form (ECF) annually (and any time you begin working with a new employer) is the single most important thing you can do to ensure you’re on track for forgiveness.
If you would like to see Public Service Loan Forgiveness continue, you can learn more about how to help by visiting PreservePSLF.com or texting PSLF to 40649. Additionally, Equal Justice Works offers a number of student debt resources on its website, where you can sign up for a monthly debt relief newsletter to stay informed on the everchanging educational debt landscape.
Article updated and reposted with permission from Law School Toolbox
Kala Mueller is the Director of Public Interest Programs at the University of Nebraska College of Law and a member of the college’s Pro Bono Committee. She received her B.S. from the University of Nebraska-Lincoln and her J.D. from the University of Wisconsin Law School, where she served as a senior editor for the Wisconsin Journal of Law, Gender & Society. Before joining the law college, Kala worked as a prosecutor and with a civil litigation firm.