What Works [From a Student Loan Attorney]

What Works [From a Student Loan Attorney]

There are numerous burning questions surrounding the Public Service Loan Forgiveness program (PSLF). Many flip to Reddit for solutions. Since I’m a student loan lawyer, I believed it might allow you to out to reply the preferred questions on the PSLF Reddit.

What is the PSLF Reddit? PSLF Reddit is a subreddit dedicated to data and help for Americans enrolled or attempting to enroll in PSLF, which stands for Public Service Loan Forgiveness.

People submit these questions on Reddit as a result of they do not know who else to ask, and PSLF Reddit is a typically supportive and useful group. 

However, commenters — even probably the most upvoted ones — could not have any experience on the matters mentioned.

I’m a student loan lawyer with years of expertise negotiating student loan settlements, navigating debtors by loan forgiveness, and serving to individuals higher perceive their student loan debt scenario.

Below, I reply among the hottest questions requested within the PSLF subreddit from an professional’s perspective. If it is advisable to discuss your particular person scenario, schedule a free 10-minute name with me to see how I may also help.

Disclaimer: I’m a student loan lawyer, however this submit accommodates common data and shouldn’t be taken as authorized recommendation.

How does the PSLF Program work?

The PSLF Program works by providing loan forgiveness to public servants on income-driven reimbursement plans (IDRs). After 10 years of qualifying on-time funds, public service employees can apply for complete student loan forgiveness.

This loan forgiveness solely applies to federal student loans, not non-public loans.

FFEL and Perkins loans have to be consolidated right into a Direct Consolidation Loan to be eligible for PSLF. (But don’t consolidate a Parent PLUS loan, or the entire Consolidation Loan is ineligible.) Learn how one can consolidate student loans for PSLF.

Very few candidates are permitted, however the federal authorities has tried to rectify the excessive rejection charge by introducing TEPSLF and the Limited Opportunity Waiver, the latter of which is out there for just one yr.

What is the distinction between PSLF and TEPSLF? You’re eligible for TEPSLF in the event you meet the necessities for PSLF however made funds underneath the incorrect cost plan.

Paying underneath the incorrect plan is a standard error, and the federal government places a whole lot of the blame on student loan servicers for deceptive debtors. Congress created TEPSLF and, later, the Limited Waiver Opportunity to assist debtors who believed they have been abiding by the PSLF guidelines however actually weren’t.

Recently, Congress created the PSLF Limited Waiver Opportunity. Between October 2021 and October 2022, debtors have entry to a limited-time waiver which will give credit for previous loan funds that might in any other case not qualify for PSLF.

Learn More: Guide to the PSLF Limited Waiver Opportunity

How do I do know if I qualify for PSLF?

You solely actually know in the event you qualify for PSLF in the event you fill out a PSLF software by way of studentaid.gov and get a response. The authorities tends to reply to your software inside 2-10 weeks.

“Do I qualify for PSLF?” is a quite common PSLF Reddit query. Generally, PSLF eligibility necessities embody:

  • Qualifying full-time employment (30 hours/week, or what your employer considers “full-time,” whichever is extra), OR
  • Qualifying part-time employment (30 hours/week or extra at a number of qualifying employers in part-time roles)
  • Qualifying reimbursement plan
  • 120 qualifying (on-time) funds
  • Qualifying kind of loan (all Direct Program Loans)
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To be an eligible public servant, you will need to work for a qualifying employer. U/freethelaw described qualifying employment within the following (correct) approach:

  • Your employer is a federal, state, native, or tribal authorities group; or,
  • Your employer is a 501(c)3 nonprofit; or,
  • Your employer is a not-for-profit that’s not 501(c)3 designated however meets different necessities associated to public service; or,
  • You are employed by AmeriCorps, in a full-time capability, or the Peace Corps.

U/veggiesandsnatches makes a great level — you can’t be permitted for PSLF till you will have made 120 funds (10 years). You can, nonetheless, periodically submit the PSLF type so as to monitor your eligibility when you attain for that 120-payment rely.

Do I nonetheless qualify if I work a number of part-time jobs?

If you’re employed a number of part-time jobs, it is best to qualify for PSLF in the event you work a minimal of 30 hours/week for qualifying employers. For instance, you possibly can work for one non-profit for 10 hours each week and one other non-profit for 20 hours each week on the identical time.

That 30 hours/week threshold is an annual common. Take all of the hours you labored in a yr and divide it by 52. If the result’s 30 or extra, try to be good.

Can my certified employer reject my full-time standing?

In uncommon instances, sure, your certified employer could reject that you’re full-time in the event you don’t work 40 hours per week. Your Public Service Loan Forgiveness employment certification type could depend on your employer’s definition of full-time.

The Department of Education says that “you are generally considered to work full-time if you meet your employer’s definition of full-time or work at least 30 hours per week, whichever is greater.”

Unfortunately, there’s a risk that your employer gained’t think about 30 hours/week to be full-time. In uncommon instances, qualifying employers could not formally affirm that you just labored for them “full-time.” They are allowed to contemplate as much as 40 hours/week as a threshold for full-time employment.

Most of the time this occurs, HR departments could also be mistakenly frightened about classifying 30-hour/week workers as full-time, presumably as a result of advantages or different tax functions.

As u/JollyCommunication25 mentioned, this full-time requirement complicates maternity go away or lowering hours throughout late-stage being pregnant.

You can take 3 months off work by the Family Medical Leave Act. Those 3 months rely in direction of PSLF, hours-wise. However, you continue to need to make on-time income-driven funds throughout these 3 months.

Working at two completely different employers means you solely need to work a complete of 30 hours/week — regardless of the employers’ definitions of full-time.

How does the brand new PSLF waiver impression my software?

The new PSLF waiver positively impacts most individuals’s PSLF purposes. Since many individuals don’t qualify for PSLF for minor causes (like being on the incorrect reimbursement plan), the PSLF Limited Opportunity Waiver may also help extra debtors qualify for loan forgiveness.

Lots of people have pressing questions in regards to the new PSLF waiver. After all, student loan debtors solely have until subsequent yr (October 2022) to benefit from this chance.

Check out my in-depth, step-by-step information to filling out the PSLF waiver.

Be inspired by u/SnugNovel7562’s expertise. This consumer had 89 qualifying funds. The waiver made 32 previous funds that weren’t qualifying into qualifying funds, pushing him instantly over that 120 cost threshold.

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Is Public Service Loan Forgiveness proper for me?

PSLF is best for you in the event you work not less than 30 hours per week for a qualifying non-profit group, and you repay your Direct Loan underneath an income-driven reimbursement plan.

Parent Plus loans or Direct Consolidation loans that consolidated a PLUS loan will not be eligible for PSLF.

If you make some huge cash, it’s possible you’ll not profit from an income-driven reimbursement plan (resembling IBR or PAYE). If you possibly can fairly repay your student loans in 10 years or much less, you most likely shouldn’t waste your time wanting into PSLF.

How lengthy will it take for my PSLF software to be processed?

It usually takes 2 weeks in your PSLF software to be processed. In the previous, it has taken rather a lot longer, however the authorities appears to be stepping up its sport.

According to this thread on Reddit, FedLoan Servicing estimates their PSLF software course of ought to take 20 days. A commenter who had efficiently earned forgiveness mentioned it took nearly two months to course of the applying and get loan forgiveness.

Is PAYE or REPAYE higher for PSLF candidates?

PAYE or REPAYE? A PAYE plan is healthier for PSLF candidates due to the way you certify your revenue for PAYE plans — and since REPAYE plans don’t have a max month-to-month cost cap.

Married debtors undoubtedly profit from a PAYE plan as a result of you possibly can file your taxes as “married but filing separately” and never rely your partner’s revenue in direction of your income-driven reimbursement plan.

Do funds throughout my grace interval rely towards PSLF?

No, funds made throughout your 6-month grace interval don’t rely in direction of PSLF. According to the U.S. Department of Education, you can not make qualifying funds till after your grace interval has ended.

However, to instantly make qualifying funds once you go away college, you possibly can consolidate your loans right into a Direct Consolidation Loan throughout your grace interval. Then, you possibly can enter certified loan reimbursement instantly.

Don’t confuse the 6-month grace interval after graduating or leaving college with the computerized forbearance because of the COVID pandemic. Non-payments throughout COVID forbearance will rely in direction of PSLF, however paying or not paying throughout a grace interval will not rely.

Do funds made in the course of the COVID forbearance rely towards PSLF?

Yes, funds made in the course of the computerized COVID forbearance rely in direction of PSLF. However, not paying throughout COVID forbearance additionally counts in direction of PSLF.

President Trump prolonged the COVID cost pause by January 21, 2021. President Biden then prolonged the pause by August 31, 2022.

Eligible Payments vs. Ineligible Payments

Only sure funds truly qualify for PSLF. A qualifying month-to-month cost is a cost that you just make:

  • after Oct. 1, 2007
  • after the 6-month grace interval when you graduate from or go away college
  • underneath a qualifying reimbursement plan
  • for the full quantity due
  • inside 15 days of your due date
  • when you are employed not less than 30 hours per week by an eligible employer or employers
  • in direction of a Direct Loan (apart from a PLUS loan or a Consolidation Loan that features a PLUS loan)

It may be discouraging to study that 0 of your previous funds have counted in direction of PSLF. Here are some widespread causes that funds are ineligible for PSLF:

  • The loan is an FFEL (Federal Family Education Loan) as a substitute of a Direct Loan.
  • You made funds underneath a non-qualifying reimbursement plan. (The Limited Opportunity Waiver could repair this downside for you.)
  • You paid late one month or did not pay the total quantity.
  • Payments have been made on loans which have since been consolidated.
  • Any cost made throughout a grace interval after you permit or graduate from college is ineligible for PSLF.
  • While in class, you can not make qualifying funds.
  • During some deferment or forbearance durations, you can not make qualifying funds. However, each paying and never paying in the course of the COVID forbearance does qualify in direction of PSLF.
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Do funds made whereas in default rely in direction of PSLF? No, funds made whereas in default will not rely in direction of PSLF.

Do funds I made earlier than consolidation nonetheless rely towards PSLF? No, funds you made on a Direct Loan earlier than consolidation do not rely in direction of PSLF. You will lose that credit. You might want to begin over in your 120 qualifying funds with the brand new Direct Consolidation Loan.

In-school deferment and PSLF

You can not make PSLF-qualifying funds on federal student support whereas in class — not less than you possibly can’t make certified funds on loans which can be paying in your present stretch of college.

If you are attempting to qualify for PSLF however re-enroll in class (not less than half-time), you possibly can decline an in-school deferment then make qualifying funds on these loans whereas enrolled.

If you went again to high school in the course of the COVID forbearance interval, your funds may not mechanically rely in direction of PSLF as a result of college deferment trumps COVID forbearance.

However, in accordance with this Reddit submit, you might be able to name and ask to have your in-school deferment eliminated retroactively. That approach, all of the months between March 2020 and August 2022 can rely in direction of PSLF.

Should I consolidate my loans earlier than I apply for PSLF?

Yes, in the event you ever intend on consolidating your student loans, it is advisable to consolidate them early to benefit from PSLF. Once you consolidate your loans, PSLF “restarts,” and you need to make 120 qualifying funds on that Direct Consolidation Loan.

The Department of Education’s Limited Opportunity Waiver modifications this a bit. The waiver permits you to briefly rely funds on a loan that has since been consolidated in direction of your 120 threshold.

Important: Refinancing is completely different from consolidation. If you refinance, your student loans are wrapped into one non-public loan. Private loans will not be eligible for student loan forgiveness.

What is a “trophy”?

A trophy is once you log into your federal student loan account and formally have 10 years of funds, at which level it’s going to say, “You’re eligible to apply for forgiveness!” A trophy is the aim of any PSLF applicant.

Check out this picture shared by u/misfit777 on what a trophy appears to be like like.

Need assist navigating PSLF? I may also help.

I’m a student loan lawyer with years of expertise navigating student loan cancellation, forgiveness, and even settlements. Schedule a free name with me, or join my publication for professional suggestions and tips.