Federal student loans have excellent perks like Public Service Loan Forgiveness (PSLF) and Income-Driven Repayment (IDR) Forgiveness. Borrowers who work for an eligible employer can have their student debt forgiven after just 10 years. Those who don’t work for a public interest employer have to wait for 20 years for forgiveness. Sadly, deferments and forbearances can complicate the student loan forgiveness clock.
In most cases, a deferment or a forbearance will pause the student loan forgiveness clock. However, there are several notable exceptions to this rule.
A recent reader email shows a classic example of how a break in payments can cause issues chasing student loan forgiveness.
The Reader Email about the Student Loan Forgiveness Clock and Forbearances
Reader Gene writes:
Over the last seven years, I have made about 80 PSLF qualifying payments. During that time, I was on three months of Administrative (processing) Forbearance and three months of Hardship Forbearance.
Will the months of Administrative Forbearance or Hardship Forbearance count as qualifying payments?
Thank you!
Public Service Loan Forgiveness Basic Requirements
As seen in our detailed breakdown of the Basics and the Fine Print on Public Service Loan Forgiveness, time towards the required ten years, or 120 months, basically has three basic requirements:
- Eligible Loans – Not all federal loans are eligible. This includes certain Plus loans as well as FFELP loans. However, some loans can be made eligible through federal direct consolidation.
- Eligible Repayment Plan – Only certain repayment plans will count towards PSLF. The income-driven plans such as IBR, PAYE and REPAYE count, but the graduated and extended repayment plans are not eligible.
- Eligible Employer – Only employers that fall within the Department of Education’s definition of public service will count. This includes most government agencies and 501(c)(3) non-profits.
Because there is room for confusion within these requirements for PSLF, we suggest sending in an employment certification form every year to your federal servicer. This is the best way to track progress and ensure that you meet all of the necessary requirements.
Is my employer eligible for Public Service Loan Forgiveness? The exact eligibility requirements can be a bit complicated. This article breaks down the criteria for eligibility. Additionally, the Department of Education recently created the PSLF Help Tool to assist with the verification process.
Forbearances and Deferments and Time Towards Student Loan Forgiveness
Unfortunately for Gene, deferments, and forbearances usually do not count towards the required 120 payments for Public Service Loan Forgiveness. Additionally, this time will not be eligible for the 20 or 25-year forgiveness programs under an Income-Driven Repayment Plan.
This is because a forbearance or deferment means that the borrower made no payment under an eligible repayment plan. (Note: $0 payments on an income-driven repayment plan can count.)
This rule can be incredibly frustrating in Gene’s case because he spent three months on an administrative forbearance. Administrative forbearances are usually the result of slow processing or errors on the part of the student loan servicer. Sadly, there is no mechanism in place to get these months to count towards PSLF.
Good News for Gene: The rules haven’t changed, but a new temporary exception will help Gene and millions of other borrowers.
Scroll down to the temporary exceptions to learn more.
The Massive Exception to the Rule
As part of the Covid-19 economic relief, all federal student loan payments were paused, and interest rates were set to zero.
Fortunately for borrowers, this deferment of payments will count towards Public Service Loan Forgiveness and Income-Driven Loan Forgiveness.
Borrowers don’t need to make extra payments for the time to count towards loan forgiveness.
The Temporary Exceptions
In October 2021, the Department of Education announced rules for temporary expanded Public Service Loan Forgiveness.
Under the expanded rules, active duty military service counts towards PSLF, even if the borrower was on a military deferment.
There is a strong possibility that this exception will become a permanent PSLF rule, but for now, it ends on October 31, 2022. Borrowers who were on a deferment during active duty military service should make sure that their certified payment count is updated to include this time.
In April of 2022, the Department of Education announced an update to the rules for calculating progress towards forgiveness. Previous periods of deferments and forbearances may now count towards forgiveness under this one-time update.
Avoiding PSLF delays due to Forbearances and Deferments
Borrowers working towards PSLF should all be on Income-Driven Repayment (IDR) plans.
One of the key requirements to stay enrolled in the IDR plans is to certify your income yearly. Missing certification deadlines can cause delays in enrollment and force a forbearance or deferment. It can also cause an interest capitalization, which can be expensive.
Bottom Line
Federal student loans can be forgiven after ten years of public service or 20 years worth of IDR payments. Unfortunately, there are other hoops that borrowers have to jump through.
If you are working towards student loan forgiveness but your loans are on a deferment or a forbearance, the clock is likely paused.
I was told by Mohela that if deferments wouldn’t count, and could be used against me. My loans are currently with Mohela with a zero balance. But was also told that isn’t correct. I’m confused. Can you provide additional insight on how deferments effect the forgiveness process
I think I can clarify things on the deferments and the forgiveness process. Generally speaking, deferments do not count toward forgiveness. However, there will be a one-time update where previous deferments will be added to your progress towards forgiveness.
I want to make sure that the Covid months of forbearance count as $0.00 payments. I meet all three requirements: direct loans, working for government the whole time, in IBR plan. But when I go to payment history on mohela it says “no payments have posted in the last 36 months”. Shouldn’t it have a history of $0.00 for the last 36 months? Are those months not counting? I submitted my Pslf application in October and it’s still processing. I read that Mohela will inform me how many qualifying payments I made once my application is accepted so maybe I have to wait until then for the payment history of 36 $0 payments to show up. Nervously trying to figure this out!
Hi Sarah,
I’m not surprised the $0 payments don’t show up in the account history. However, it shouldn’t impact your PSLF eligibility. The time during the Covid payment and interest pause should still count towards PSLF.
So, a person who is in “administrative forbearance” is the SAME as someone in “COVID forbearance” during this special PSLF waiver program?
They are both treated equally towards the special PSLF waiver program and add to the 120 payment periods? Is this correct and true? Thank you Sir.
I’m not entirely sure what you are asking, but if you benefited from the Covid-19 payment and interest freeze, that time can also potentially count towards PSLF (assuming you meet the other requirements).
Thank you Sir.
To clarify, if the person has met all the other requirements for the special waiver PSFL program:
If a person is in “administrative forbearance,” with Mohela, does that count for PSFL waiver program purposes towards the 120 count for forgiveness? Or does a “COVID forbearance” only count towards the 120 count for student loan debt forgiveness. I assume there are many different styles of “forbearance”. During this very special time, does the “administrative forbearance” count towards the 120 count?
Thank you Sir.
That time should count. However, it’s best to discuss it with Mohela to confirm. They may have to go into the system to make sure it is classified correctly.
Thank you Mr. Lux for your kind advice.
I think it’s absolutely insane that periods of **mandatory** bankruptcy forbearance do not count, despite whether or not any payments were received. They say that the reason they don’t is ‘you’re not in repayment’ but here are some facts: I filed for Chapter 13 bankruptcy. In my state, the program is 3 years long. Navient/Sallie Mae filed a **claim** to get some of the money. The court gave me a monthly amount that I had to pay for the entire 3 years. Sallie Mae/Navient took that money because they FILED a claim (why would they file a claim if I wasn’t in repayment??). They took that money and it counts for nothing. I was also in a $0 IDR at the time of filing bankruptcy because of my low income. I was also a full-time public servant so despite all of the payments they received because they filed a claim (obviously refuting the claim I wasn’t in repayment), they completely left me stranded and despite being in my 17th year of public service and still have loans from the 90s, they still claim I have 3 years left to qualify for the 10 years (supposedly) PSLF program.
I was hoping someone would respond to this because it’s nonsensical to me…. You made payments but they don’t count because you’re not in repayment….my head hurts
You are right about that. They really do a poor job of helping people with student loans who are in bankruptcy. Hopefully, the new bankruptcy policy will help borrowers.
Thank you for this article
Thank you for simplifying the web of student loan chaos! I began teaching in August 2013 but was under deferment, based on the advice of the loan specialist, until January 2014. Is there any way to make payments now for those months of service so I can achieve loan forgiveness in August 2023, or go back and ask for teacher deferment during that time?
Thank you!
The Department of Education is currently reviewing some of those deferments and you may get credit automatically for this time. This article explains the process and what will count.
I thought there was a recent exception that forbearance of more than 12 consecutive months or 36 cumulative would count towards the 120 payments…
https://finance.yahoo.com/news/biden-administration-erases-student-debt-of-more-than-40000-borrowers-184657817.html
Oh I see your update above!
No worries! Thanks for taking the time to comment and making sure that I get the article updated!
What is the update on this? I have the same question.
Hi Jessie,
I added a section above on the temporary rules that are now in place.
I recently wrote a full explanation on the temporary rules and that new article hopefully has the answers you are looking for.
I’m also in the same boat as others in this thread. I have most of my Direct Loan documents from 2009-2010 where I was on forebearance with a reduced payment. So, from what I can tell, forebearance does not always mean ‘no payment’ status; it could mean ‘reduced’ payment status and in that case, if on a reduced payment status, my question is will that month count toward PSLF? I sure hope so. I was just trying to keep from going in default which would have opened the door to more problems and money.
This is a great question, and I’m not able to offer a definitive answer, but I will share my thoughts and what I’ve learned.
For starters, the Department of Education has not released any specific guidance on payments made as part of a reduced payment forbearance. Because those loans were not technically in repayment status, my expectation is that those months will not count towards PSLF.
That said, things are still in flux with the limited waiver. The initial review is still ongoing. This might be an issue where reaching out to your elected officials can make a difference.
Hi Michael – If a person’s IBR was surely $0 based on salary and dependents, but the loans were in defferrement because the person was told that their employment would not qualify because they are a paralegal and not an attorney for the government, do you think there would be an exception where the payments would have been zero whether they were in defferrment or not? The person should have been making the payments as they would have been $0.00 under the IBR. But they didn’t. Any advice is helpful.
Hi Jordan – I’ve seen plenty of cases where borrowers were told bad advice, but this doesn’t usually result in an exception being made. Generally speaking, if enough people were given bad information, the government will do things like the limited waiver on PSLF, but they don’t really do case by case exceptions.
Hello Micheal,
Thank you for all your hard work, expertise and information. My question is about the 25 year cancelation and when the clock starts to run. I was just on the official government student loan page https://studentaid.gov/manage-loans/repayment/plans/income-driven
and if I am reading it correctly, a specific passage, which I will insert below appears to say that any deferment, forbearance( which results in a zero dollar payment) or repayment plan counts toward the 25 year cancelation.
Do you agree with my reading of this paragraph?
“Under all four plans, any remaining loan balance is forgiven if your federal student loans aren’t fully repaid at the end of the repayment period. For any income-driven repayment plan, periods of economic hardship deferment, periods of repayment under certain other repayment plans, and periods when your required payment is zero will count toward your total repayment period. Whether you will have a balance left to be forgiven at the end of your repayment period depends on a number of factors, such as how quickly your income rises and how large your income is relative to your debt. Because of these factors, you may fully repay your loan before the end of your repayment period. Your loan servicer will track your qualifying monthly payments and years of repayment and will notify you when you are getting close to the point when you would qualify for forgiveness of any remaining loan balance.”
Thank you in advance for answering this because this is a huge question for me because I have a combination of economic hardship, forbearance, deferment and IBR since 1998.
Thank you again
Jim
Zero dollar payments on IDR plans like IBR all count towards forgiveness. As for forbearances and deferments, they usually don’t count, outside of the exceptions mentioned in this article.
I’d encourage you to reach out to your servicer for an updated count on where you stand.
Thank you Michael
So based on your answer the language I found does not change your opinion as to when forbearance and deferment count. Can you explain your reasoning to me as to why you believe that the language, specifically ” For any income-driven repayment plan, periods of economic hardship deferment, periods of repayment under certain other repayment plans, and periods when your required payment is zero will count toward your total repayment period” does add to the listed exceptions to when deferment and forbearance counts.
Thank you again