Many of you likely know about the federal Public Service Loan Forgiveness (PSLF) program,. The program allows you to eliminate loan debt if you work for a qualified public service employer. If you qualify, the program forgives the balance on your federal student loans after you make 120 monthly payments.
While the program works well for some borrowers, others encounter problems and confusion. Some expected loan forgiveness, then never saw it materialize. In an effort to aid these borrowers, in spring 2018, the federal government created the Temporary Expanded Public Service Loan Forgiveness (TEPSLF) program. It allocated $350 million to help people who might have been misinformed in the early days of the regular PSLF program. That summer, I described TEPSLF and how audiology and speech-language pathology professionals can use it.
Before I share details of the updated version of this program, let me share the CliffsNotes version of the original program. Most of the regular PSLF rules still apply with one main exception:
Past payments made on any of the following repayment plans, which normally would not qualify, can now count toward the 120 monthly payments needed.
- Graduated Repayment Plan
- Extended Repayment Plan
- Consolidation Standard Repayment Plan
- Consolidation Graduated Repayment Plan
This is a pretty big deal if you have direct loans and have been working for a qualified employer for 10 years or more. There are two other necessary qualifications:
- You need to have been working for a qualifying employer (government or nonprofit) for 10 years or more. If you’re in the first few years of repayment and your career, this program is not for you.
- Your last 12 payments prior to applying need to be made on an income-driven repayment plan or need to have been the same amount or higher than what you would have paid under one of those plans.
What do we know a year later
The program was originally funded with $350 million, and the government has allocated an additional $350 million. The funding is important because the program is first-come, first-served. When the money is gone, the program ends—hence the word “temporary.”
During most of 2018, the first-come, first-served format created a level of anxiety. People thought the money would dry up fast. The past year showed this is not likely to be problem. In April of this year, only $10.6 million of the $700 million available was used. What does that mean? There’s still a huge pot of money waiting to be used.
If you ignored the program last year because you weren’t paying an income-driven equivalent amount and didn’t think it’d still be around 12 months later, you still have time. The money is waiting for you.
Maybe you’ve just finished your ninth year of qualifying employment. Last year this program wouldn’t have looked like an option for you. Now it could be. It would a great time to start getting organized and make sure your payments are high enough.
If you haven’t yet worked a full 10 years at a qualifying employer or made 120 payments, but are close to doing so, you should consider switching to an income-driven repayment plan now. Even if your current payments are equal to or higher than what an income-driven payment would be, it seems to help speed up the review process for TEPSLF and ensure your last 12 payments will meet the requirements. Before going this route, make sure the rest of your situation qualifies you for the program.
Even if you think you already met all qualifications for this program, here’s what you need to do:
1. Submit a PSLF Forgiveness Application right away.
2. Wait for it to be reviewed and ultimately denied.
3. Confirm it was denied solely because of unqualified payments. If it is denied for any other reason, you will need to address that issue before moving on.
4. Send an email to TEPSLF@myfedloan.org requesting reconsideration.
For more information on TEPLSF and what to include in that email, visit the student aid site.
If you have additional questions, come ask me at the ASHA Convention in Orlando. I’m presenting on student loans and how to repay them.
Jacob W. Parish, a certified financial planner™ professional, focuses on helping audiologists, SLPs and other young health care professionals navigate financial planning issues. Visit his website, Schooner NextGen, or follow him @SLP_Finance. Securities and Advisory services offered through Geneos Wealth Management, Inc. Member FINRA/SIPC