Public Service Loan Forgiveness Has New Rules — 3 Changes Borrowers Should Know About
Recent updates to the Public Service Loan Forgiveness program mean borrowers need to verify their loan types and repayment plans to stay eligible for forgiveness.
Short Answer: The Public Service Loan Forgiveness (PSLF) program has introduced three key changes affecting loan eligibility, qualifying payments, and repayment plans. Borrowers should review these updates to ensure they remain on track for loan forgiveness.
Three Key Changes to PSLF
- Expanded Loan Eligibility: Certain previously ineligible federal loans may now qualify for PSLF, but only if consolidated into a Direct Loan.
- Repayment Plan Adjustments: Borrowers must be enrolled in an income-driven repayment plan or the 10-year Standard Repayment Plan to qualify, with updated rules clarifying which plans count.
- Qualifying Payment Count Updates: The program now counts some payments retroactively, including those made on loans before consolidation, but only under specific conditions.
What This Means for Borrowers
Borrowers should first confirm their loans are Direct Loans or have been consolidated into Direct Loans. Next, they must verify they are on a qualifying repayment plan, typically income-driven or the standard 10-year plan. Finally, they should check the number of qualifying payments made, as some past payments may now count toward forgiveness.
Example Scenario
Consider a borrower with Federal Family Education Loans (FFEL) who previously was ineligible for PSLF. After consolidating these loans into a Direct Consolidation Loan and enrolling in an income-driven repayment plan, some payments made before consolidation may now count toward the 120-payment requirement, accelerating forgiveness eligibility.
Alternatives and Next Steps
- Use the official PSLF Help Tool to check loan and repayment plan eligibility.
- Consider consolidating non-Direct Loans into a Direct Consolidation Loan to become eligible.
- Enroll or switch to an income-driven repayment plan if not already on one.
- Submit the PSLF Employment Certification Form annually or when changing jobs to track qualifying payments.
Bottom Line
The recent PSLF changes offer a valuable opportunity for many borrowers to qualify for loan forgiveness. Staying informed and proactive about loan types, repayment plans, and payment counts is essential to maximize benefits under the updated program.
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