When discussing Public Service Loan Forgiveness (PSLF), many borrowers get confused about the difference between ten years at an eligible employer and 120 certified payments.
Even though 120 payments add up to ten years, there are some significant differences. The big fear for most borrowers is that they will have to start over if they make a mistake.
This article will break down the time requirement for PLSF, including how changing employers, switching repayment plans, and breaks in payments impact the clock.
Why 120 Certified Payments is More Accurate than Ten Years for PSLF
It isn’t wrong to say that it takes ten years to qualify for Public Service Loan Forgiveness.
However, it is more clear to say that qualifying for PSLF requires 120 certified payments.
This critical distinction goes back to the payment certification process. When a borrower submits an employer certification form, the loan servicer does a comprehensive review of the borrower’s account before certifying the payment. The PSLF loan servicer, MyFedLoan, will check to see that the borrower has eligible loans and is on an eligible repayment plan. If a requirement is missing, the payment does not get certified.
If you only focus on the ten years of public service requirement, you risk disappointment with the results of your PSLF application.
Watch the Fine Print. In addition to 120 certified payments, borrowers must be employed full-time by a PSLF-eligible employer at the time they apply for forgiveness and when the debt is forgiven. If you wait until you have made 120 payments, it could take longer than ten years to have the debt forgiven.
Changing Employers, Breaks in Payments, and Switching Repayment Plans
Many borrowers fear that if they start a new job, pause payments, or take a break from public service, they will have to start PLSF from scratch.
Fortunately, there is no consecutive payment requirement. As a result, borrowers can pause repayment, leave the public sector for a private company, and later pick up where they left off.
As long as the total certified payments add up to 120, borrowers can qualify for PSLF.
Sherpa Tip: As a sharp reader pointed out in the comments, it’s also worth noting that the 120 certified payments cannot start before 2007, when the PSLF program was first created.
The Starting Over Risk
Even though payments don’t have to be consecutive, there is still a risk that borrowers might have to start from scratch on PSLF.
Consolidating Federal Student Loans – While there are many benefits to federal direct consolidation, one of the downsides is that it creates new loans and restarts the forgiveness clock. The limited waiver on PSLF resolved this issue for some borrowers, but the limited waiver expires on October 31, 2022.
Ineligible Loans or Repayment Plans – If a borrower isn’t on an eligible repayment plan or doesn’t have eligible loans, they won’t make any progress towards PSLF. Many borrowers think they are making progress but have to start over when they discover a major flaw.
Note for Borrowers on the Wrong Repayment Plan: If you discover that you were on the wrong repayment plan, there is a temporary federal program that can help.
Getting Payments Certified
The payment certification process is relatively straightforward. Borrowers need to complete this form and have it signed by their employer.
If you are looking for a guided application, the PSLF Help Tool is an excellent resource. The Department of Education created the PSLF help tool to aid borrowers in verifying employment eligibility. The PSLF Help Tool also assists borrowers in completing the necessary forms for certification.
How Often Should I Certify Payments?
There isn’t a requirement for payment certifications. Theoretically, a borrower could complete one employer certification after ten years.
However, waiting until ten years have been completed is a huge mistake. If there is an eligibility problem with the borrower’s loans or repayment plan, it would be devastating. Loan eligibility issues are often easy to fix, but it requires restarting the PSLF clock. Thus, waiting ten years may mean wasting ten years.
The best practice for borrowers is to certify payments when:
- starting a new job,
- leaving an old job, and;
- getting married.
Additionally, borrowers should plan on submitting a certification form once a year at the minimum. Frequent certification is the best way to maximize PSLF forgiveness and avoid mistakes.