Public Service Loan Forgiveness (PSLF) is a popular program that millions of student loan borrowers are depending on. PSLF provides for complete forgiveness of federal student loans after 120 “qualifying payments.” A qualifying payment is one made on a Direct federal student loan under an income-driven repayment plan or the 10-year Standard plan, while working full-time for a qualifying employer (typically a public entity or 501(c)(3) nonprofit organization).
The program has been a hot topic lately, especially in these polarized political times. It can be difficult to stay on top of the latest developments. Here’s where things stand.
Efforts to Repeal Public Service Loan Forgiveness
There have been two primary attempts to repeal the PSLF program. One was initiated by Congress through proposed legislation called the PROSPER Act. The other was initiated by the White House via a budget proposal. Neither proposal passed, and both would have grandfathered in current borrowers who are in repayment. Efforts to repeal the program continue, but under the current divided Congress, nothing is happening thus far.
Efforts to Protect Public Service Loan Forgiveness
While some lawmakers are trying to repeal the program, Senators Kirsten Gillibrand and Tim Kaine have filed a bill designed to shore up and streamline the PSLF program. The bill would make it easier to make qualifying payments towards the program, and it would expand the type of federal loans that are eligible for PSLF. Borrowers would also have a greater ability to dispute errors and mistkaes made by loan servicers.
Recent Expansion of Public Service Loan Forgiveness
Congress recently passed a bill creating the Temporary Expanded Public Service Loan Forgiveness Program (TEPSLF), which would allow certain payments that normally wouldn’t qualify for PSLF to actually qualify. The requirements of the program are rather absurdly complex. Nevertheless, borrowers – including a client of mine – have successfully gotten their loans forgiven under this program.
Significant Court Ruling on Public Service Loan Forgiveness
One of the potential issues with PSLF is that not all nonprofit organizations may qualify for the program. Employees of one such organization sued FedLoan Servicing and the Department of Education after they reversed their positions on whether employment qualifies PSLF. A federal court recently issued a ruling in favor of the student loan borrowers who brought the suit, finding that the Department of Education’s reversal was arbitrary and capricious. This is good precedent.
There Are Still Lots of Processing Delays and Denials
Recent statistics show that the vast number of people applying for PSLF have been denied. This is likely due to the complex requirements of the program that have been poorly communicated by loan servicers and misunderstood by borrowers, coupled with servicer delays and errors when counting qualifying PSLF payments. While I expect the numbers to gradually improve over the coming years, borrowers should remain vigilant and should make absolutely sure they are doing what they need to do to make progress towards the program and protect their rights.
Adam S. Minsky is an attorney focused entirely on helping student loan borrowers and their families. If you need an independent evaluation of your eligibility for (or progress towards) PSLF, contact his office.