The Public Service Loan Forgiveness (PSLF) program was created under the College Cost Reduction and Access Act of 2007 in an effort to encourage more people to pursue a career in public service by offering a path to loan forgiveness. PSLF makes it more tenable for attorneys to work in lower-paying public interest jobs, but even after ten years, there continues to be a lot of confusion regarding program requirements. Below we’ll take a look at some of the criteria of the program, along with the current state of PSLF affairs. Although things are looking a bit grim at the moment, there are some reasons to be optimistic.
If you are employed full-time with a qualifying employer after law school, you may be able to receive loan forgiveness under PSLF after you have made 120 qualifying payments toward your student loans. These payments do not have to be consecutive, so although moving in and out of public service or missing a payment will delay loan forgiveness, it won’t prevent you from being eligible.
Only Direct Loans can be forgiven under PSLF. Loans received under another federal student loan program can become eligible for forgiveness if you consolidate them into a Direct Consolidation Loan. However, it’s important to understand that if you consolidate your existing Direct Loans with other loans, you will lose credit for any qualifying PSLF payments you made on the Direct Loans before they were consolidated. In this situation, you may want to leave your existing Direct Loans out of the consolidation and consolidate only your other federal student loans.
In order to qualify for forgiveness, you must be enrolled in one of the income-driven repayment (IDR) plans. Fortunately, this is often the most logical choice for those pursuing forgiveness, as the IDR plans usually offer the lowest monthly payment option for a borrower.
If you are looking for more information regarding loan forgiveness, including qualifying employment and payments, eligible loans, etc., the office of Federal Student Aid provides a comprehensive PSLF Questions and Answers page.
The first cohort of borrowers became eligible for loan forgiveness last year, and as of September 2018 there is a group of applicants – 206 of them – who have been granted forgiveness. The percentage of overall applicants that this group represents is not high (more on that in a moment), but for now let’s just bask in the knowledge that it is happening for some people.
We do know that some of the initial applicants were denied because they were on the wrong repayment plan. The good news for those individuals is that Congress set aside a $350 million fund under the Consolidated Appropriations Act of 2018 to offer PSLF to these borrowers. However, this opportunity, which the Department of Education is referring to as Temporary Expanded Public Service Loan Forgiveness (TEPSLF), is a one-time only expansion of PSLF. It will be provided on a first come, first served basis and only until funding runs out.
Despite the important purpose that PSLF serves, its future is anything but certain. Both the President’s fiscal year 2018 budget and H.R. 4508, known as the PROSPER Act, have proposed eliminating PSLF. There was also a proposal under the previous administration to cap forgiveness under PSLF at $57,500. If PSLF is important to you, I would encourage you to contact your senators and representatives and ask them to preserve the program and vote against any bill that would eliminate or cap PSLF.
Remember those 206 applicants who have received loan forgiveness? Unfortunately, according to new data released in December by the Department of Education, they represent fewer than 1% of the applications processed for loan forgiveness. As of September 30, 2018, 32,409 applications have been denied due to “not meeting program requirements” and an additional 11,892 have been denied due to “missing information.” Yikes. In October, the Coalition to Preserve PSLF wrote a letter to the Secretary of Education that requested a breakdown of the reasons why so many applicants failed to qualify. Although we know some applicants were on the wrong repayment plan, aside from that, no one outside of the Department of Education seems to have a good sense of why the overwhelming majority of applications are being denied.
With such limited information, it’s hard to know how concerned to be regarding the high rate of denials. At this point, submitting an Employment Certification Form (ECF) annually (and any time you begin working with a new employer) is the single most important thing you can do to ensure you’re on track for forgiveness.
If you would like to see Public Service Loan Forgiveness continue, you can learn more about how to help by visiting PreservePSLF.com or texting PSLF to 40649. Additionally, Equal Justice Works offers a number of student debt resources on its website, where you can sign up for a monthly debt relief newsletter to stay informed on the everchanging educational debt landscape.
For more advice on public service career options and money matters, check out these additional resources:
- What’s Your Alternative? Uncovering Alternative Career Paths for the Law Firm Skeptic: How Do I Become a Government Attorney?
- Podcast Episode 96: How to Rapidly Pay Off Law School Debt (With Guest Financial Panther)
- Podcast Episode 149: Saving Money in Law School
Looking for some help to do your best in law school? Find out about our law school tutoring options.
Here’s a great Forbes article from last week on why we shouldn’t be too discouraged by the high rejection rate for early PSLF applications. https://www.forbes.com/sites/robertfarrington/2019/01/22/why-the-public-service-loan-forgiveness-headlines-are-misleading/#4b4a54ea1df0