October 2, 2019

Public Service Loan Forgiveness Best Practices

By Victoria Chamberlin

The Public Service Loan Forgiveness (PSLF) Program was established under the College Cost Reduction and Access Act of 2007. The program permits Federal Direct Loan borrowers who make 120 qualifying monthly payments under a qualifying repayment plan, while working full-time for a qualifying employer, to have the remainder of their balance forgiven. Since the first borrowers became eligible in 2017, only about 1,200 of the 100,185 applications have been approved. If you are hoping to be approved for PSLF, there are steps you can take to be prepared.

 Keep Everything

10 years is a long time and much can change. This is especially true for non-profit organizations, which are among the list of qualifying employment. If your organization doesn’t exist by the time you are ready to submit your application for loan forgiveness, or your employment certification form, it will be that much harder for you to prove that you worked there. Holding on to your own employment records can help you make your case. Don’t throw away W-2 forms, offer letters or contracts until your application is approved. And consider making digital copies of all documents in case the originals are misplaced or damaged. 

You Are Your Own Best Advocate

When you submit your employment certification form to the Department of Education for PSLF, your loans will automatically be transferred and FedLoan will be your new servicer. Contact your previous servicer and ask (or demand, if it comes to that) for a complete record of all the qualifying payments you made on your consolidated loans in an income-based repayment program. This will come in handy if FedLoan miscalculates your number of qualifying payments toward PSLF.

Do Your Taxes

This may seem obvious, but it’s a huge part of this process. You must submit your tax return to FedLoan every fall to recertify your income-based repayment plan and calculate the correct monthly payment. If you fail to do this, you will be automatically placed in a standard repayment program. This will make your monthly payment much larger, and that month will not qualify toward the 120 payments. Save yourself a lot of hassle, and don’t procrastinate this task. FedLoan will send you a letter when it’s time to recertify.

Be Diligent

Set aside time every few months to call FedLoan’s servicing department and make sure you are still in the correct payment plan. Send in your employment certification forms annually, which can now be done online. It will be frustrating, but it will save you time and headaches when you’re nearing the finish line.

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