5 things you need to know about canceling your student loans under the PSFL program

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In 2007, the Bush administration signed the Cost Reduction and Access to Colleges Act which was created to ease the financial burden on low-income students, reduce borrower student debt interest rates, support historically black colleges and universities, but also ensure that borrowers who worked in professions of the service public benefit from a loan discount because of their commitment to public service.

When the program was initially implemented, many would argue that the U.S. government did not release complete and accurate information on the conditions for eligibility for the rebate, which created further confusion when borrowers applied for a rebate. public loan discharge.

In 2017, the US Department of Education began accepting applications from the first cohort and found that 99% of applicants were refused pardon. And from November 2020 to April 2021, 98% of applications were refused.

Congress created the Temporary Extended Public Service Loan (TEPSLF) forgiveness in 2018 to address the issue of thousands of borrowers being denied forgiveness. TEPSLF expanded the number of repayment plans that were not eligible for a discount under the original PSFL program.

Essentially, PSFL and TEPSL are very similar, except the latter includes additional repayment plans. Here are 5 things you need to know to get forgiveness on your loans through the PSFL or TEPSL program:

You must be working full time for an eligible employer.

You cannot work anywhere and / or part time if you want to be approved for forgiveness.

Your profession and title have nothing to do with your qualifications, but the sector (private vs public) – hence the name “public service”. The public service includes law enforcement, education, nonprofit organizations, government, and academia. For example, if you were working full time as an auditor for a “Big Four” accounting firm, you would not qualify instead of working full time as an auditor for a government agency or non-profit organization. lucrative.

The full-time classification can be set by your qualifying employer or 30 hours per week, whichever is greater. And if you work part-time for two qualifying employers and it meets the 30-hour-per-week requirement, that would count as a full-time job. As of July 2021, the education department included full-time employees of 501 (3) nonprofit religious organizations, such as clergy to qualify for the PSLF.

You must make payments under a qualifying repayment plan.

If you are on PSFL, repayment plans for qualifying pardon include income-based repayment plans such as Pay As You Earn (PAYE), Revised PAYE (REPAYE Plan), Income Based Repayment Plan (IBR) and Income Contingent Repayment Plan (ICR Plan)). In TEPSFL, repayment plans include the extended repayment plan, the progressive repayment plan, the standard consolidation repayment plan, and the consolidation phased repayment plan.

Plans that do not qualify for any of the programs: Standard Repayment Plan and Standard Repayment Plan for Debt Consolidation.

Your loans must be direct loans.

Simply put, loans issued directly by the US government are direct loans.

Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans (on behalf of the student, not on behalf of the parent / guardian), and Direct Consolidation Loan are examples of Federal Direct Loans eligible for cash back. under the PSFL.

Be careful when consolidating loans after you have already made payments eligible for forgiveness, as this will require you to start the forgiveness process again. If you have loan types such as the Federal Family Education Loan (FFEL) and Perkins Loans, they do not qualify for the PSFL or TEPSFL program.

You have to make 120 payments, but there is a catch.

It was reported that thousands of borrowers were not approved for remission because they did not understand the required payment frequency. One of the requirements is to make 120 payments; however, there are three things you should know.

# 1 Payments should be made monthly over a 10 year period. Making three payments in a month does not count as three remittances, but rather one.

# 2 Monthly payment must be made within 15 days of the due date for it to count. For example, if your monthly due date is the 10th of each month, you must make a payment by the 25th of the month.

# 3. The 120 payments don’t have to be consecutive, but the missing months will further delay your eligibility for forgiveness.

You must submit an employer attestation form.

Accurately completing and submitting the Employer Certification Form is the only way your loan officer can verify that you are working for a qualified employer. If you are in doubt about your forgiveness qualifications, the employer’s certification form will outline what you need to know. The first three sections of the form must be completed by you, the borrower, while the last section must be signed by the employer.

To properly track your remittance, I recommend submitting the form on an annual basis so you can see your progress as you make payments – by submitting it in early January.

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