This week we received an email from Dave, who is concerned his employer may not be eligible for Public Service Loan Forgiveness (PSLF). In our discussion today, we’ll cover the process for verifying PSLF employer eligibility and outline the necessary actions. If you have any questions for the Sherpa, don’t hesitate to reach out.
No matter who your employer is, the most reliable way to check for PSLF eligibility is by submitting an employer certification form. By doing this, borrowers can get a tally of how many eligible payments they’ve made out of the 120 required.
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, borrowers will need their FSA ID and a W-2 or Federal Employer Identification Number (EIN) from their employer. The estimate that the process takes about 30 minutes.
Sherpa Note: I highly recommend that borrowers use the PSLF Help Tool to determine their eligibility for the Public Service Loan Forgiveness program. This tool is essential for confirming eligibility with a high degree of certainty, and it greatly simplifies the process of gathering and submitting all required documentation.
The remainder of this article will explore the specifics of employer eligibility in greater depth. However, for an immediate and clear understanding of your own eligibility status, the PSLF Help Tool is an invaluable resource.
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 has reached out with a highly technical legal query. Should he decide to file a lawsuit against the Department of Education, the laws he mentions could be pertinent. However, thankfully for both Dave and the average borrower, an intricate legal analysis is typically not required to address questions related to Public Service Loan Forgiveness.
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?
If you’re unsure whether your employer qualifies for the Public Service Loan Forgiveness (PSLF) program, like Dave, it’s a good idea to fill out an employer certification form. This form can be found on the Department of Education’s website and needs to be completed by your employer. (Tip: the PSLF Help Tool on the website can assist you in filling out this form.) It’s wise for anyone aiming for PSLF to submit this form annually to keep their records current.
Once submitted, the form will be reviewed for verification that your employer qualifies as a public service employer.
The employer certification form doesn’t just help establish your employer’s eligibility; it also verifies that you’re on a qualifying repayment plan and that your loans qualify. When you successfully submit the form, MOHELA, the PSLF servicer, will send you a letter detailing the number of qualifying payments you’ve made towards the 120 needed for PSLF. Once you reach these 120 certified payments, your loans become eligible for discharge.
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 Public Service Loan Forgiveness should not require a law degree.
For the vast majority of borrowers, it is as simple as submitting a form.
