It’s 2019. Have you checked on your PSLF eligibility status?
Make sure your PSLF eligibility is on track at least every year.
Don’t rely on people you’ve never met to win a lawsuit in order to qualify for public service loan forgiveness. You can’t control what happens in a courtroom, and you can’t control what a judge says. If you want to ensure you receive public service loan forgiveness on schedule – after ten years of qualifying public service employment – is to focus on what you can control. Make sure you are checking all the blocks for PSLF so that when you are ready to apply, it’s a no-brainer.
1.) Make sure your loan qualifies for PSLF.
Check your statement. Make sure you know specifically what type of loan you have. Not every type of student loan is eligible for public service loan forgiveness. This was a big point of confusion for many borrowers. But only direct federal student loans will qualify.
These types of loans are not eligible for PSLF:
- Federal Family Education Loan (FFEL) Program;
- Federal Perkins Loans
- Private (non-federal) student loans.
If you have FFEL Program or Perkins Loan Program loans, you may consolidate them into a Direct Consolidation Loan to take advantage of PSLF. However, payments made on your FFEL Program or Perkins Loan Program loans before you consolidated them, even if they were made under a qualifying repayment plan (see below), do not count as qualifying PSLF payments. In addition, if you made qualifying payments on a Direct Loan and then consolidate it into a Direct Consolidation Loan, you must start over making qualifying payments on the new Direct Consolidation Loan. That is, your ten-year counter resets to zero, and you have to start from scratch.
2.) Make sure you are enrolled in a qualifying repayment plan.
These are PSLF-eligible repayment plans.
- Revised Pay As You Earn (REPAYE);
- Pay As You Earn (PAYE);
- Income-Based Repayment (IBR);
- Income-Contingent Repayment (ICR) plan;
- Standard repayment plan with a maximum 10-year repayment period;
- Any other Direct Loan repayment plan if payments are at least equal to the monthly payment; the amount that would be required under the Standard Repayment Plan with a 10-year repayment period.
If you are not enrolled in one of these plans, your payments will not count toward PSLF eligibility.
To maximize the loan forgiveness benefit, enroll in PAYE or REPAYE as soon as possible, if you qualify. Otherwise, go with IBR or ICR. This is because the PLSF program requires ten years of payments, anyway. So if you’re on the standard repayment plan, which is based on a ten-year repayment period, there probably won’t be much left over to forgive once you’ve made your required payments.
Though repayment plans other than the REPAYE, PAYE, IBR, and ICR plans are qualifying repayment plans for PSLF, you must enter REPAYE, PAYE, IBR, or ICR to have a remaining balance to forgive after becoming eligible for PSLF. Otherwise, your loans will be fully repaid within 10 years.
3.) Recertify your employment at least every year.
To qualify for PSLF, you must make 120 full, on-time, scheduled payments under a qualifying repayment program while working full time for a qualifying public service employer. And twice a year is better: You don’t want to be making payments for another 10 months after you qualify for loan forgiveness. Or even worse, have a change of employment status go undetected for an entire year or more, setting you off your PSLF eligibility timeline by months.
Your qualifying payments don’t have to be consecutive to qualify for PSLF. You can take breaks in employment. But if you’re making payments whenever you take breaks in public service employment, you won’t get as much of your balance forgiven.
Jason Van Steenwyk is an experienced financial industry reporter and writer. He is a former staff reporter for Mutual Funds, and has been published in SeekingAlpha, Nasdaq.com, NerdWallet, Value Penguin, RealEstate.com, WealthManagement.com, Senior Market Advisor, Life and Health Pro and many other outlets over the past two decades. He is also an avid fiddle player and guitarist. He lives in Orlando, Florida.