The Public Service Loan Forgiveness program was created to provide some debt relief for federal student loan borrowers who enter public service careers. To qualify for federal student loan forgiveness, borrowers must meet a complex set of requirements, which has led to extremely high rates of ineligibility.
One challenge is that borrowers are responsible for understanding and meeting the program requirements, so it can be easy to get off track. Fortunately, they can use the PSLF Help Tool to assess their eligibility and monitor their progress toward student loan forgiveness.
The PSLF program provides relief to federal direct student loan borrowers who work for government, nonprofit organizations and in public service careers that benefit society but often pay modest wages, like social work and education. With PSLF, borrowers can have the remaining balance on federal direct loans forgiven after making 120 qualifying monthly payments under an approved repayment plan while working full time for a qualifying employer.
Borrowers must meet all of the program requirements to receive loan forgiveness, and doing so has proven more complicated than many realized. The program was established in 2007 and the U.S. Department of Education began accepting and reviewing applications for student loan forgiveness in 2017. In June 2018, the program had only a 1% approval rate for processed applications. In September 2020, the department released statistics showing that the approval rate for processed applications had risen to just 2.4%.
This extremely high ineligibility rate is understandably discouraging, but fortunately many of these borrowers may become eligible for loan forgiveness in the future. Many borrowers were found to be not eligible because of missing information on their form, and many more simply did not have sufficient qualifying payments.
Other borrowers had applications that were ineligible because they did not meet one or more program requirements, most commonly being enrolled in a nonqualified repayment plan. To help, Congress created the Temporary Expanded Public Service Loan Forgiveness program, which provides an opportunity to extend relief to borrowers of direct student loans who made some or all of their on-time monthly payments in the wrong repayment plan.
What Is the PSLF Help Tool?
For borrowers just starting out with the PSLF program, the high ineligibility rates underscore the risks of misunderstanding or making an error related to one or more of the program’s qualifications around the type of loan, employment and repayment plan. The requirements can feel overwhelming, and it can be easy for a borrower to get off track for a significant amount of time before realizing it. That means wasted time and money.
That’s why the Department of Education created the PSLF Help Tool in 2018. The online tool walks borrowers through a series of questions related to the PSLF program and its requirements to help borrowers assess their eligibility and get or stay on track to student loan forgiveness.
According to the Department of Education, most people complete the PSLF Help Tool process in 30 minutes or less. The department has continued to enhance the tool, such as an improvement in June 2020 that allows users to search a new employer database for specific eligibility information about their employer, and a redesign in November 2020 that includes a new, single form for the entire PSLF program.
Borrowers can use the tool to understand the PSLF program, assess their progress and complete the form to certify their employment and apply for forgiveness.
Understanding the PSLF Program
If you are just learning about the PSLF program or need a refresher, the tool can help you better understand program requirements in detail and determine whether you want to participate.
For example, you may have read that you need to work for a qualifying employer, but you may be wondering exactly what counts. Using the tool, you can look up those details, including whether your employer or a potential employer is eligible.
You can also check to see whether your student loans qualify and, if they don’t, get personalized help and advice about your options depending on what type of loans you have. For example, you may need to combine your loans into one consolidated direct loan to participate, and the tool has information about how to proceed.
Assessing Your Progress
Once you decide to pursue loan forgiveness, another great way to use the PSLF Help Tool is for an annual checkup to help you stay on track.
You can also use the tool to check in any time your situation changes or if you are considering changes, like new employment. For example, if you’re thinking about taking a new job, you may want to look up your new potential employer to see whether that employer qualifies for the PSLF program.
You will need to input all of your information each time you use the PSLF Help Tool, although your employer data is stored for future convenience once you use the tool to complete a form. At least once a year, gather any documents that you may need to reference, such as your W-2 forms and employment history, and try to complete the Help Tool process in one session since it will not save your information if you stop before completing the process.
Completing the Form to Certify Employment and Apply for Forgiveness
Previously, borrowers were required to fill out a different form depending on whether they were certifying their employment, applying for PSLF or applying for the Temporary Expanded PSLF program. With the recent enhancements to the PSLF Help Tool, however, there is now just a single form.
To stay on track, borrowers should submit the form annually or when changing employers. Using the information provided on the form, the Education Department will let you know if you are making qualifying PSLF payments.
Keep in mind that if you don’t periodically submit the PSLF form, then when you are ready to apply for forgiveness, you will have to provide employment certification for each employer that you worked for while you made the required 120 payments.
Once you have answered the questions and entered your information, the PSLF Help Tool will allow you to download and print a partially completed form that you and your employer can sign. Importantly, you will need to submit the form to FedLoan Servicing, a student loan servicer, after it is signed because the tool does not do this for you.
Using the PSLF Help Tool as a guide can help you avoid errors or incomplete information that can disqualify your application.
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How Borrowers Can Use the Public Service Loan Forgiveness Help Tool originally appeared on usnews.com