Updated October 2022
As the expiration of the PSLF waiver draws near we want to take a few moments and provide some updates.
First, we are very happy to announce that in only one year the amount forgiven under PSLF has grown from roughly $1B to over $10B! That’s right…”B” as in “Billion”! Most of this is attributable to the waiver. So if you do or did work for a 501(c)3 non-profit, or a government entity, and you still have FFEL loans in your portfolio, be sure to get those consolidated over to Direct and certify that employment using the PSLF tool by October 31st. Or, if you have all Direct loans, but were in some other repayment plan (such as a 25 or 30 year), you can get credit for that as well.
Next, the Department of Education recently gave us a glimpse of the “Overhaul” part of the “PSLF Waiver and Overhaul”. While the waiver is temporary, the overhaul refers to permanent changes for the program. Final details won’t be announced until November, but here’s what they have released so far:
- The Department will be awarding credit toward PSLF for borrowers who spent more than 3 years cumulatively in a forbearance or 12 consecutive months in a forbearance. Unfortunately, this does not include residency forbearance, but it does include CARES Act forbearance.
- The Department will change the definition of “full time” employment status. Anyone working 30 or more hours per week in or more jobs will be able to get credit. This is important. We’ve met several physicians over the years who were putting in well over 30 hours per week, but their contract stated they we not full-time employees, and that disqualified them from PSLF.
- ED is considering whether borrowers who provide services to a qualifying employer, but are ineligible to provide those services as an employee due to State law, should be able to participate in the program through the qualifying employer. This is huge as they specifically cited doctors in TX and CA as the reason for this consideration. So we’re anxious to see what they come up with.
These changes are not likely to impact a huge number of physicians, but they could be life changing for those who find themselves in one of these three circumstances. Again, we expect final details in November, with those changes becoming effective July 1st of 2023.
Original Post from October 2021
1) ANY past payment on FFEL and Perkins loans will qualify for PSLF as long as they are consolidated to Direct Loans by 10/31/2022.
2) Any plan payments made that were not counted towards PSLF due to being late, or in the wrong payment plan, will be considered qualifying payments.
#1 is certainly the most significant change for those borrowers who still have FFEL loans. That said, our advice to you has always been to consolidate with Direct loans right after you graduate. And when it comes to qualified payments, you’ve likely been using an Income-Driven Repayment (IDR) plan, with auto-pay, so all of your payments are being counted. If this holds true for you, or you’ve decided not to pursue PSLF at all, feel free to stop reading, you’re good!
Find out if you qualify for additional payments by logging into www.studentaid.gov and viewing your aid summary. Expand out all of the options and see if you took out any loans that DO NOT begin with the word “Direct”. If you find some, you may qualify.
If you HAD FFEL or Perkins loans, but have since consolidated them:
Did you work in a qualifying setting and make payments on these loans? If so, have you ever submitted an Employment Certification Form (ECF) for that time period? If so, you may receive automatic credit in the next few months. If not, complete the ECF using the PSLF Help Tool and send it to the applicable employer(s).
If you still have FFELL or Perkins loans:
Consolidate your FFEL Program loans and Perkins Loans into a Direct Consolidation Loan by Oct. 31, 2022. We suggest doing this ASAP using the PSLF Help Tool to guide you towards the loans that must be consolidated. This is important, because you cannot receive credit for payments under this limited-time period if you consolidate after that date. After the consolidation is complete, you’ll then use the Help Tool to submit a PSLF form to complete your Employment Certification on those loans.
If you made any payments on a Direct loan, submitted a PSLF Form, and were told they are not qualified due to your payment plan or because they were late:
-Do nothing. You should be awarded credit in the coming months.
If you made any payments on a Direct loan, but have not completed a PSLF Form:
It’s time to do that! Start with the PSLF Help Tool, and be sure you have your employer’s EIN number handy.
As always… ‘til DEBT do us part.
Doctors Without Quarters
Brandon Barfield is the President and Co-Founder of Student Loan Professor, and is nationally known as student loan expert for graduate health professions. Since 2011, Brandon has given hundreds of loan repayment presentations for schools, hospitals, and medical conferences across the country. With his diverse background in financial aid, financial planning and student loan advisory, Brandon has a broad understanding of the intricacies surrounding student loans, loan repayment strategies, and how they should be considered when graduates make other financial decisions.