Public Service Loan Forgiveness Program FAQ

This month, improvements to the Public Service Loan Forgiveness (PSLF) program went into effect. The changes include: 

• Allowing borrowers to receive credit toward PSLF on payments that are made late, in installments, or in a lump sum. Prior rules only counted a payment as eligible if it was made in full within 15 days of its due date.
• Counting certain periods in deferment or forbearance toward PSLF to avoid instances where a borrower may have faced confusing choices about pausing payments or getting credit toward PSLF.
• Providing borrowers with a weighted average of existing qualifying payments toward PSLF when they consolidate their Direct Loans. Under current rules, borrowers lose all progress toward forgiveness when they consolidate. Under the new regulations, for example, a borrower with 60 qualifying payments on Direct Loan with a balance of $30,000 who consolidates their loan with another Direct Loan with a balance of $30,000 with 0 qualifying payments will have a new payment count of 30 payments. Simplify criteria to help borrowers certify employment
• Adoption of a single standard of full-time employment at 30 hours a week. Prior rules required borrowers to either work 30 hours per week at multiple jobs or whatever their employer defined as full-time. This created confusing and varying standards. A single 30-hour-a-week 4 requirement will make it easier for borrowers and employers to establish what it means to be full-time.
  
• Enabling borrowers to access a hold harmless option to have other periods of deferment and forbearance potentially counted toward PSLF if they make payments equivalent to what they would have owed at the time. This includes getting credit for periods during which the borrower would have had a $0 payment.
• Creation of a formal reconsideration process for borrowers to have their applications reviewed again if there are errors made in review.

For background, the PSLF provides full forgiveness to public servant with federal student loan debt (i.e. any full-time employee of a school district) after 10 years of service. Individuals pay their monthly payments for ten years, and the remaining amount is then forgiven. A new FAQ is available on the PSLF changes here.