A Note from the Sherpa: This article was originally published on October 7, 2021. The Limited Waiver program described below has now expired.
However, many borrowers can still fix their PSLF eligibility issues by taking advantage of the one-time IDR update, which remains available until April 30, 2024.
It finally happened!
The Department of Education is finally fixing many of the issues that made Public Service Loan Forgiveness a mess.
There is a ton to unpack with this announcement, but two critical details stand out:
1.) Many borrowers who lost time towards PSLF because they were on the wrong repayment plans or had the “wrong” loan type can now qualify for forgiveness.
2.) This temporary program lasts until October 31, 2022. Borrowers need patience as counts get updated, but it is essential that this deadline doesn’t get missed by the borrowers who need to consolidate.
Who is now eligible for PSLF?
If you lost out on time because you were on the wrong repayment plan or because you had loans that needed consolidated, such as FFEL or Perkins loans, your previous payments may now count.
Even though there are some significant changes to PSLF, two requirements remain:
- Borrowers still need to make a total of 120 payments (10 years).
- Borrrowers must work for an eligible PSLF employer.
Parent PLUS loan borrowers are the one group that won’t benefit from the major changes.
Some borrowers will see their count towards PSLF automatically updated. Others will need to consolidate before the October 31, 2022 deadline to take advantage of the new rules.
Who Needs to Consolidate?
Federal student loan consolidation doesn’t lower interest rates. Instead, consolidation is a tool for borrowers to gain program eligibility.
Consolidation converts debt that isn’t eligible into PSLF into an eligible loan. Historically, the downside to consolidation was that it reset the forgiveness clock to zero.
The changes announced today meant that the reset doesn’t happen. If you made otherwise eligible payments, consolidating means that the old payments will now count towards PSLF. For many borrowers, this might mean forgiveness comes years earlier than initially anticipated.
If you have FFELP loans or Perkins loans, they are not eligible for PSLF. If you consolidate, the loans become eligible. Under the new rules, prior payments still count towards PSLF. The one exception is Parent PLUS loans. Parent PLUS loans can still become eligible for PSLF, but the payments made before consolidation won’t count.
The big deadline for the borrowers who need to consolidate is October 31, 2022.
Sherpa Tip: This is a complicated issue. If you are confused about whether or not your loans need to be consolidated for PSLF, I’d suggest taking a couple of steps:
First, visit the studentaid.gov website to get a complete list of your federal loans and how they are classified.
Additionally, call your servicer to discuss the loans you have and whether or not they require consolidation.
Updating Payment Counts
If you have previously applied for PSLF or submitted an Employer Certification Form, your payment count should automatically update in the coming weeks.
Borrowers with loans serviced by MyFedLoan should click on the “check my progress” link available on the Account Summary page. It looks like this:
I’m told that the FedLoan payment counts may take months to update. However, borrowers should receive an email in the coming days, or weeks at the latest, with updated counts.
If MyFedLoan does not service your loans, it means you have not completed an Employment Certification Form or applied for PSLF. If you think there is even a tiny possibility that you might qualify for PSLF, send in an Employer Certification form as soon as possible.
Working with FedLoan Servicing (MyFedLoan)
Working with MyFedLoan may present a significant challenge for borrowers trying to navigate the expanded PSLF rules.
Assisting borrowers with a major policy change is a challenge for loan servicers under the best of circumstances. Because FedLoan servicing is ending their contract with the Department of Education, difficulty is almost a certainty.
By December, MyFedLoan will be out of the loan servicing business. This means they don’t have much of an incentive to hire new staff or to train people.
For borrowers, the usual loan transfer advice still applies, but downloading documents and records takes on added importance. You may have a prior payment that only recently became eligible under the new rules. Your count towards forgiveness should automatically be updated, but if it isn’t, you will need to prove your eligibility. If the records get lost in the transition, you won’t have the documents you need.
Refunds for Previous Payments
One of the most remarkable aspects of the new rules is the refund provision for borrowers.
If you made “extra” payments due to the rule changes, you should receive a refund for the additional payments. For some borrowers, this might mean an enormous check is coming soon.
Unfortunately, the refund only applies to borrowers who earn forgiveness under the new rules. If you have previously had your loans forgiven under PSLF, additional payments due to expanded eligibility will not be refunded.
Expanded PSLF Example
To illustrate the new rules in action, an example might help.
For our example, let’s assume the following for Evan, our example borrower:
- Evan finished college in 2005.
- At that time, Evan had a mix of federal direct loans, FFEL Loans and Perkins Loans.
- After college, Evan took a job with the county government, where he was employed full-time from 2005 to present.
- When Evan started repayment in 2005, he couldn’t afford your monthly payment, so Evan signed up for the Graduated Extended Repayment Plan (a non-IDR plan that isn’t eliglbe for PSLF).
- In 2010, Evan relized his repayment plan wasn’t eligble for PSLF, so he signed up for IBR to fix the mistake.
- In 2015, Evan learned that his FFEL loans and Perkins loans were not eligible for PSLF, so he consolidated into a Federal Direct Consolidaiton loan.
- Evan thought he would earn forgiveness in 2025.
In this example, Evan had two major mistakes in his quest for PSLF. First, he was on the wrong repayment plan. Second, Evan waited to consolidate and lost precious time towards PSLF.
Under the new rules, the period between 2010 and 2015 now counts towards PSLF. Additionally, the time between 2005 and 2010 should also count towards PSLF.
This means that Evan earned PSLF in 2015 under the revised rules, even though he thought he was starting from scratch in 2015. Evan should qualify for a refund for all payments made from 2015 until the present.
Expanded Eligibility Rules and Conditions
In the coming weeks and months, expect plenty of clarification on the rules and how to correct mistakes.
For now, borrowers can find the most comprehensive list of rules on the Limited Waiver page on studentaid.gov.
This page will be updated as additional information becomes available.
Hi there!
I am one of those who have being paying off my med school loans for 20 years working in nonprofit hospitals since, but had FFEL loans. Sadly I still have a good chunk left and am in a relatively low paid specialty teaching medical students and trainees. I missed the major memo on this in 2022 but received a letter in the mail last month stating that if I consolidate my federal student loans by Dec 31, 2023 I will be able to access PSLF. I accomplished this, but it appears they put me on standard repayment rather than income driven ( despite me requesting the income driven plan). I assume this is bc my income is too high. 2 questions:
1) Am I dreaming to think that I might qualify for PSLF and that my prior payments will actually count toward it?
2) Is it still the case that I do not need to be on an Income Driven Repayment plan in order to qualify?
thanks!
1) I don’t think you are dreaming. Based on the info you shared in your comment, I think you are an excellent candidate to take advantage of the one-time account adjustment and potentially get your loans forgiven.
I’d suggest completing an employer certificaiton as soon as possible and get that submitted.
2) If you are still at your employer, and you get credit for the previous 10+ years you have already worked, you wouldn’t need to be on an IDR plan. That said, I’d suggest you look into the IDR issue a little more closely. I’ve heard from many borrowers who had issues with the IDR paperwork they submitted with their consolidation applicaiton. You can do a quick estimate of a SAVE payment here, if that is lower than your current plan, I’d suggest reaching out to your servicer to disuss your opitons.
Thank you for your many years of public service!!
Regarding PSLF; I’ve been paying Parent PLUS loans for more than 120 on-time consecutive payments through Nelnet. I’ve continuously worked at a qualifying public service non-profit for more than 15 years. I earn too much to qualify for nor benefit from an income driven repayment plan. I’ve submitted a PSLF request form to MOHELA and am waiting for their decision. Yet, from what I’ve read, I shouldn’t be optimistic. Is there a path forward for PSLF or TEPSLF?
There are a couple of issues here based on your comment.
The first problem is that Parent PLUS loans are not eligible for PSLF. Parent PLUS Loans need to be consolidated into a federal direct loan in order to gain PSLF eligibility.
The second problem is that you are not on an eligible repayment plan. While TEPSLF does address that specific issue, it wouldn’t fix your loan eligilbity issue.
You might also want to revisit the question of whether or not you can benefit from an IDR plan. I’ve seen many borrowers who wrongly assumed income-driven repayment wouldn’t help. For Parent PLUS loans, federal direct consolidation would open the door up to ICR eligibility.
This is a reach, but is it possible to get PSLF credit for years of service at a non profit prior to obtaining my Masters degree? The loans I am working to pay off are from my Masters program.
I worked for a nonprofit for 7 years before attending grad school. I graduated in 2010 with my masters and began repayment. I unfortunately only received 3 1/2 years credit for PSLF with my grad loans because of my part time status (I’ve been working a total of 12 years). Essentially, is it possible to go back in time and apply my years of service prior to grad school towards my PSLF?
It’s unlikely. Part of the requirement for PSLF is that you make payments during your time working in Public Service. You couldn’t have made payments on loans that didn’t exist yet.
I have both subsidized and unsubsidized loans which I consolidated to help optimize my payments. I have just received information that the loans have processed but am waiting for the payment counts to be updated.
Do you know if the counts will be done separately (one count for the subsidized consolidation and one for the unsubsidized)? Or will the highest count overall be applied to both loans which are part of the same consolidation?
It seems that the highest count will be applied to all loans if my understanding is accurate.
That sounds accurate Maggie. The one thing I will add for anyone else reading this is that this page is on the limited waiver on PSLF. The limited waiver expired on 10/31/22.
This is such a wonderful public service, thank you!
While applying to see if I was eligible for the PSFL program a few weeks ago, I was informed that because of my loan type (Unsubsidized FFEL Consolidation Loan; payments made over 7yrs at a listed non-profit), I am not currently qualified unless I consolidate.
It only makes sense for me to consolidate if previous payments ‘count’, otherwise there will be no impact on my repayment schedule (final payment est. late 2025; no longer at a non-profit), thus no forgiveness or relief. Like so many Gen X’s, I have paid the original loan off two times over by now and have spent most of my career in non-profits.
Anyway! At the bottom of the application there was a very clear note declaring that ‘payments made on loans before you consolidate them do not count as qualifying PSLF payments.’
So, now I am confused. This waiver seems to point to pre-consolidation payments being included, but the application for the program itself is very clear that they do not count.
Halp! And thank you!
Thanks for the kind words!
And good job on reading through all of the documents… I can see why it seems so confusing. The general rule is that when you consolidate, it creates a new loan and erases your progress towards PSLF. However, under the Limited Waiver on PSLF, this rule temporarily does not apply. As long as you consolidate and document your PSLF before October 31, you should be good. That said, a quick call to your servicer to verify everything is always a good idea.
I got my letter that I was approved for PSLF and my balance was transferred to Mohela on July 29th. When I log into Mohela as of today, my balance shows $0.00. When will I know how many payments I still have to make?
I have $7400 in FFELP and $74K in regular student loans. Do these count as 2 payments when I consolidated them with Great Lakes? Or is the one payment I made to Great Lakes on both of them considered 1 payment?
Payments are done on a monthly basis, so if you had two student loans and made a payment towards both, that would be 1 of the required 120 payments necessary for PSLF.
I’d suggest calling Mohela to get a count of how many payments you still have to make.
I keep seeing information that consolidating won’t “reset” the clock on PSLF. But will it reset the clock on IBR?
Great question Jen!
For a limited time, consolidating will not reset the IDR forgiveness clock either, which includes IBR payments. Be sure to check out the article on the IDR payment count update for deadlines and full rules.
Is there any reason to apply for PSLF if you only have 7 years of public employment?
I started work in 2004 and left in 2014, so while I had 10 years it seems not all of it qualify.
I’d recommend sending in the PSLF application even though you don’t expect to have the full 10 years.
First, you might end up in a PSLF job in the future, and the longer you wait to document your old employment, the harder it will be to get it done.
Second, there has been talk of awarding partial PSLF for people who have 5 years. In fact, this was something that candidate Biden advocated for when he was running for President. Partial PSLF may never become a reality, but in the unlikely event that it does happen, it will be good to have your PSLF documents on file already.
I’m in a similar situation but I did less time (2 yrs) working for a PSLF-qualified employer. I’m currently under the PAYE plan, and held off on sending in the PSLF application bc I was worried it would negatively affect my current payment plan. That’s not the case? Also, should I be keeping payment records in preparation for the PAYE 20yr forgiveness?
Sending in a PSLF certification does not negatively impact your monthly bill in any way.
I’d encourage you to keep records of all of your PAYE payments. The servicers and the Department of Education should track all of these payments, but the only way to know for certain is to keep a backup copy.
Which payment plan should be chosen if consolidating under a Direct Loan from a FFEL loan when you already work for an eligible employer for PSLF/TEPSLF ?
Hi Mary,
There are several different repayment plans you can choose from. Most borrowers opt for Income-Driven Repayment plans like IBR, PAYE, or REPAYE. You can use the federal loan simulator to see what your monthly payment would be on the various plans.
All of the IDR plans are eligible for PSLF, so you can choose the one that fits your needs best.
Good Luck!
would the standard payment plan for consolidated direct loan qualify after you consolidate from ffel consolidation loan?
Are you asking about previous payments on the standard plan? If so yes. Any period where you were in repayment should count. This chart from studentaid.gov should explain things.