Am I Too Late For Public Service Loan Forgiveness?

Michael Lux Blog, Student Loans 0 Comments

Last week we received an email from a reader who wanted to know if her previous employment with the federal government counted towards Public Service Loan Forgiveness.  She also wanted to know what would happen if she “signed up” for it today.

Using Previous Employment Towards Public Service Loan Forgiveness

Borrowers are able to use prior jobs to count towards Public Service Loan Forgiveness.  However, there are very strict requirements.  These previous payments must be “certified eligible payments”.  Meeting this standard can be tricky.

In order for a payment to be a certified eligible payment it must:

  • Be made using an eligible repayment plan – Not all federal repayment plans can be used towards Public Service Loan Forgiveness.  If you were on the IBR, PAYE, or 10-year standard repayment plan; it is eligible.  Repayment plans like the extended repayment plan, or graduated repayment plan are not eligible.  Even if you paid more than what you would have paid on IBR, the payment is not eligible.
  • Be a certified payment – This requires an employer certification form.  This form requires your employer to certify two things.  First, that you were working a public service job.  Second, your employer must also certify that you were working sufficient hours.  The form explains that your employer must consider you to be full-time and that you must average over 30 hours per week.

Beyond the basics there are a number of details that borrowers should understand.  This article on Public Service Loan Forgiveness should be of some assistance.  Ultimately, it is up to each borrower to get their payments certified.  Submitting employer certifications on a yearly basis is a good way to make sure that your payments are all counting towards the 120 eligible payments that need to be made for forgiveness.

Is it too late to sign up?

Public service loan forgiveness isn’t really a program with a “sign up” procedure.  Rather, it is something that you certified that you did, in order to have your loans forgiven.

Not having a defined deadline is a good thing.  However, because of the fine print associated with the program, many borrowers will find that their past public service efforts may not count.  Public Service Loan Forgiveness is something that takes some planning in order to do it right.  Some individuals may luck into having met the requirements, but this is likely a rare exception.  As we have explained, the certified eligible payment is a strict standard and any requirement not met will mean that month’s payment does not count.

Keep an Eye on the News

It is possible in the months and years ahead that you could become too late to sign up for the public service loan forgiveness program.  If PSLF is ever eliminated by Congress, they may create a procedure so that people who are working towards loan forgiveness can get enrolled, and therefore grandfathered into the program.

Admittedly, this is nothing more than speculation now.  We do know that the program will be expensive to the federal government and that there have been proposals to cap or eliminate the loan forgiveness.  At present, there are a lot of variables.  The most important thing from a borrower perspective is to keep a close eye on the news and to be an active citizen if you hear word that Congress is considering elimination of public service loan forgiveness.