public service loan forgiveness employer eligibility

How do I know if my Employer is Eligible Public Service Loan Forgiveness?

Michael Lux Blog, Mailbag, Student Loans 10 Comments

This week we received an email from Dave, who is in a “quasi-public instrumentality” job. Dave has done some research and wants to know if his employer is eligible for Public Service Loan Forgiveness (PSLF). Today we will discuss how to determine PSLF employer eligibility and specific steps to take. If you have a question for the Sherpa, feel free to ask us.

Regardless of who you work for, the best way to determine if your employer is eligible for PSLF is to submit an employer certification form. Borrowers who complete the employer certification form will receive a count of the number of qualifying payments they have made towards the required 120.

People like Dave who are worried that their employer might not be eligible may need to take a couple extra steps in order to protect themselves going forward.

Dave’s Email About PSLF Employer Eligibility

Hi Sherpa,

Fellow attorney here…and I’m flummoxed.

While my question might seem highly specialized, I still think it could be more broadly helpful.

Anyway:

I’m hoping to continue making qualifying payments for PSLF at my new job at the Tennessee Education Lottery Corporation (TEL). TEL was created by statute in Tennessee as “a body, politic and corporate, and a quasi-public instrumentality, and not a state agency or department, which shall be deemed to be acting in all respects for the benefit of the people of the state through the operation of a state lottery and in the performance of other essential public functions entrusted to it.” TCA 4-51-101(c).

What the hell is a “quasi-public instrumentality?” And is it a “governmental entity” for the sake of PSFL?

To attempt to answer my own questions, the only definition to the phrase “quasi-public instrumentality” in TN statute comes in TCA  4-39-101, which provides chapter definitions for Payment of Taxes by State Vendors and Subcontractors.  

“As used in this chapter:

(3)  “State governmental entity” means a state agency, department, board, or commission, or a public corporation or quasi-public instrumentality that performs essential public functions entrusted to it by the state; and”

Should I start celebrating that my work for the Lottery, a “quasi public instrumentality” in TN, indeed qualifies for PSLF? Quasi public instrumentality = state governmental entity under the law, right? Or am I being a first year law student stretching on an exam?

I think there’s meat on the bone with questions about “quasi public instrumentalities,” even if my question might be a little specific for the general audience that finds your site.

Thanks for taking the time,

Dave

Answering Dave’s Question

Dave writes with a highly technical legal question. If he were to initiate a lawsuit against the Department of Education, the laws cited might become relevant. Fortunately, for both Dave and the average borrower, a complicated legal analysis is not usually necessary to resolve Public Service Loan Forgiveness Questions.

Employers Eligible for Public Service Loan Forgiveness (PSLF)

Three employer types qualify as public service:

  • Government – Including Federal, State and Local
  • Non-Profits – 501(c)(3) Organizations
  • A Private Not-For-Profit Organization – Must have one of the following public service activities as the primary purpose:
    • (1) emergency management,
    • (2) military service,
    • (3) public safety,
    • (4) law enforcement,
    • (5) public interest legal services,
    • (6) early childhood education,
    • (7) public service for individuals with disabilities and the elderly,
    • (8) public health,
    • (9) public education,
    • (10) public library services,
    • (11) school library services, or
    • (12) other school-based services.

How Do I Know If My Employer Qualifies?

People in Dave’s position who are not clear whether or not their employer is eligible should submit an employer certification form. This form is available on the Department of Education’s website and must be filled out by your employer. We recommend anyone pursuing PSLF submit this form every year to make sure the records stay up to date.

Once submitted, the form will be reviewed for verification that your employer qualifies as a public service employer.

Not only with the Employer certification form help you verify that your employer is eligible, but it is also confirms that you are on an eligible repayment plan and that your loans are eligible. Successful form submission will result in FedLoan servicing sending a letter explaining how many qualifying payments you have made towards PSLF. Once you get to 120 certified payments, your loans will be eligible to be discharged.

Strategy Limitations

The steps we have outlined so far constitute what we would consider to be the “best practice” for verifying employer eligibility. However, successful completion of these steps does not guarantee public service loan forgiveness eligibility. Recently, a lawsuit was initiated by four attorneys who received multiple employer certifications from their loan servicer. They were on track for Public Service Loan Forgiveness, but then the Department of Education changed its mind about their qualification under the 3rd definition of pubic service. Not only were they told their employer didn’t qualify, but previously certified payments were retroactively rejected.

If you work for a 501(c)(3) organization or the government, this specific issue isn’t much of a concern. However, if you are like Dave or there is some ambiguity about your eligibility, the case should be followed very closely.

We suggest that borrowers in this situation create a savings account or conservative investment account to set aside money for a potential PSLF issue. If for some reason these borrowers cannot qualify for PSLF, this money set aside can be applied to their loans in an attempt to aggressively pay off the debt. The saved money will likely earn less interest than the loans generate, so things won’t break even, but it is a good way for borrowers to protect themselves. If PSLF ends up working out, the money is a great head start for a downpayment on a house or retirement.

Bottom Line

Figuring out whether or not you qualify for Pubic Service Loan Forgiveness should not require a law degree.  For the vast majority of borrowers, it is as simple as submitting a form.

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Jay Beh
Jay Beh

If I have started my own non-profit and work for myself, would this still be sufficient?

The Student Loan Sherpa
Reply to  Jay Beh

Is your non-profit a 501(c)(3)? The best way to find out for sure would be to fill out an employer certification form.

Amanda Driesen
Amanda Driesen

Would working at waste management be a public service one

The Student Loan Sherpa
Reply to  Amanda Driesen

After a quick google search, it looks to me that Waste Management is a large publicly traded for-profit company. As such, they probably will not qualify as a PSLF employer. You can always send in an employer certification form to check definitively, but I would be shocked if it was approved.

Wayne Terrelle Conley
Wayne Terrelle Conley

City bus driver for PSLF. Keolis Transit Service is contracted to serve as public transportation system. I’m a city bus driver do I qualify for PSLF

The Student Loan Sherpa

The actual job doesn’t matter… it is the employer that matters. If your employer is the city or a non-profit, you will likely be eligible. The only way to know for certain is to complete the employer certification form.

Shannon Hay
Shannon Hay

How about this one: Worked at a charter school which is listed as a government entity under its chart contract, but was paid thru a management company (likely not a non-profit). Am I correct that this time does not count towards PSLF?

AliMe
AliMe
Reply to  Shannon Hay

Hello, I too have asked this specific question on several forums over the years without any response or further understanding. For starters, IcI not turn in a form to find out if it qualifies because 1)I have declined employment opportunities as they likely won’t qualify (ie don’t work for one currently) and 2) have enough denial issues already working in a capacity that 100% should qualify, so getting approved when a position is outsourced to a for profit management company seems like an impossibility. The tough reality seems to be that the (already low paying positions) I’m qualified for in my desired areas have almost exclusively been outsourced by governmental entities (public education, public social services) to management companies. Usually the school district: writes job description, posts job, conducts interview, makes offer, you work in the district (for less money)…BUT your actual employer is not the district. I’d love to have someone tell me I’m wrong. The situation is entirely backwards to the actual purpose of PSLF.

The Student Loan Sherpa
Reply to  AliMe

This is definitely an issue that should be addressed.

It might sound ridiculous, but actual benefit to the public is not a consideration for PSLF. The Department of Education looks at who you technically work for, rather than the work that you do.

Given the many issues that there have been with PSLF, it seems likely that some new legislation will have to be drafted to clean things up. Hopefully they find a way to be more inclusive of work that actually performs a public service.

The Student Loan Sherpa
Reply to  Shannon Hay

I can’t say for certain, so my suggestion would be to try to get your time certified. If they say your employer isn’t eligible, bummer, but at least you know for sure. The form doesn’t take long to fill out and the potential benefit is massive.