This week we received an email from Dave, who is concerned his employer may not be 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 whom 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 of extra steps to protect themselves going forward.
A New Shortcut – The Department of Education PSLF Help Tool
When this article was first written, people like Dave had to do a bunch of research into employer eligibility for PSLF.
The Department of Education recently made employment verification much easier. Using the PSLF Help Tool, borrowers can verify employer eligibility and generate the necessary form that needs to be completed.
According to the Department of Education, the process takes about 30 minutes. Borrowers will need their FSA ID and a W-2 or Federal Employer Identification Number (EIN) from their employer.
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 if their employer is eligible for Public Service Loan Forgiveness (PSLF) should submit an employer certification form. This form is available on the Department of Education’s website and must be completed by your employer. We recommend anyone pursuing PSLF submit this form every year to ensure 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.
Does My Old Employer Count Towards Public Service Loan Forgiveness?
Because there isn’t a requirement to “enroll” in PSLF, old employment can be certified and count towards PSLF.
The challenge with prior employers is getting the necessary paperwork signed. For this reason, the sooner you can get your documents submitted, the better.
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 public service. Not only were they told their employer didn’t qualify, but the Department of Education retroactively rejected previously certified payments.
If you work for a 501(c)(3) organization or the government, this specific issue isn’t much of a concern. However, borrowers with some ambiguity about their eligibility should follow the case closely.
Don’t Ignore Other Forgiveness Opportunities: Public Service Loan Forgiveness is the most popular forgiveness program, but many other forms of federal forgiveness are available
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, funds are available to pay off the debt aggressively. 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: Verifying Employer Eligibility for Public Service Loan Forgiveness is Easy
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.
I was reviewing the PSLF and TEPSLF Certification & Application form (Expiration 11/30/2023) and there appears to be a section which reads:
“A contracted organization is a separately organized employer that through a written agreement with a qualifying employer performs services for the qualifying employer. The direct employees of the contracted organization are not direct employees of the qualifying employer. However, if the direct employees of the contracted organization are in positions or providing services that, under State law, cannot be filled or provided by a direct employee of a qualifying employer, the Authorized Official of the qualifying employer can certify their employment as if those employees were direct employees of the qualifying employer.”
So, I know working as a contractor typically doesn’t qualify, but if I was working for a medical staffing agency and was working in facilities that were not-for-profit and/or providing public health services because they could not find a direct employee to fill their need, would that time qualify under the above definition?
Great question Trevor, and nice work reading the fine print on the form.
The classic example of that exception would be a public defender appointed by the court. Many jurisdictions have statutes that prohibit these attorneys from being directly employed by the state or the court in order to avoid a conflict.
As for your situation, if there was a state law that prohibited hiring someone directly into your position, you probably meet this exception.
That all said, even if you don’t think you meet the exception, it doesn’t hurt to turn in a PSLF form to find out for certain.
What if you work for a qualifying PSLF company and have already been qualified but you want to start your own for for-profit business while still working for the qualifying employer.
Are we allowed to have one job that qualifies and one business that is ours?
Are you allowed to work a part-time job for a non-qualifying employer as long as you maintain full-time employment for the PSLF Company?
There isn’t any prohibition on having a side-hustle or additional stream of income if you are working toward PSLF. The key is that you continue to meet the full-time PSLF employment requirement and that you don’t leave the job too early.
Just to verify that I am not eligible for the 10 yr loan forgiveness:
– I served in the military before 2007 (92-98)
– I have not and currently not working for the government, non profit or for private non profit organization
– the only way to get the loan forgiveness is to rush out and get a job in one of these organizations and work 10 years with them?
The 10-year public service loan forgiveness program does require 10 years of work for the government or an eligible non-profit after 2007. You could start that at any time.
Also, just to clarify, the new SAVE plan also introduced a 10-year forgiveness provision for borrowers with smaller balances. This option does not have an employer requirement.
I just switched to the SAVE program…but I do not have a small balance…over $100k 😕
Are USAA employees eligible for PSLF?
I’m not familiar with the USAA organizational structure, but if you use the tool described in the article above, you will be able to get verification directly from the Department of Education.
Good morning Mr. Lux,
My wife is currently at the maximum number of eligible payments, but they are only counting 100 of them. My wife is an RN and works for a 501(c)(4) that receives funding from the State of Indiana and basically administers health insurance coverage for low income individuals (Medicaid and HIP). My wife performs case management for the organization, reviewing specific situations from a medical perspective. The definition mentions, “…..doctors, nurses, nurses in a clinical setting, …….”. The servicer is taking the stance that since she isn’t in a clinical setting, the employer doesn’t qualify. My question to them and others is (and no one can answer me), why are nurses mentioned twice in the definition if only a clinical setting applies?
Thank you,
Chris Verstijnen
Hi Chris,
This is a tricky one, but I think I can shed some light on this issue.
However, first I have a question. How is it that they are counting 100 of your wife’s eligible payments? Has she changed employers? Either an employer is eligible or they are not. Partial eligibility doesn’t make sense to me.
As for your question, the important thing to keep in mind is that they are not looking at your wife’s title, job description, or educational background. The employer must meet the eligibility requirements for the time to count. If you look at the definition of public health at the bottom of page three of the PSLF application, it specifies the employers that qualify as public health. [Note for others: this step is only necessary because she is at a 501(c)(4) instead of a 501(c)(3)]
Based on the information shared in your comment, it sounds like your wife’s employer is truly a borderline case. Because she has already been denied, I’d encouarge her to submit a request for reconsideration. I’d also encourage her to work with her employer on this issue. When a workplace is PSLF eligible, it is a huge recruiting tool for that employer, so they should be highly motivated to make sure she qualifies and they might be best situated to make the argument that they meet the public service eligiblity.
Michael,
Thank you for responding. To answer your question, yes, she was at two different employers. The one that she was at when she made the other 20 payments is no longer her employer either. I did submit some sort of “reconsideration” paperwork last year to Mohela (her new servicer) to see if things would change, but it seems as if things are at a standstill until the Federal loan payments start back up again.
Chris
Chris,
I’m glad to hear that she is currently employed with the employer that is definitely eligible. It sounds like in the worst case scenario, she stays at her current job for 20 months and gets the debt forgiven.
I’d encourage you to check out the one-time IDR count adjustment that is scheduled to happen in early 2024. She might get credit for some additional payments as part of this process.
That’s the thing, she is NOT at the eligible employer anymore. That was the first employer where she made 100 payments. The second one is where the confusion is. And now she is at a third that doesn’t qualify.
That is a much more difficult situation. Not to pile on, but there is one other issue to keep in mind: she will likely need to be employed at a PSLF-eligible employer at the time forgiveness gets approved. If forgiveness is granted under the now-expired limited waiver based on your request to reconsider, you might be able to get around this issue.
So I am confused here, because I work for Tennessee Education Lottery myself. Does the TEL qualify for public service loan forgiveness?
Any help is appreciated, also. I worked for a contractor for TEL too. Please help.
Hi Michael. It really depends on how the Tenessee Education Lottery is structured. If it is a part of the Tennessee government, it probably will count. If it is part of a private for-profit company, it probably won’t. Working as a contractor is unlikely to count.
I’d suggest you use the PSLF Help Tool and submit an application as soon as possible. It is the only way to know for certain whether or not your employer will count.