If you’re a public servant — a teacher, a nonprofit worker, a public defender, a government worker, or another — you might have cheered when you heard about the Public Service Loan Forgiveness program. This program, in theory, allows borrowers to make 10 years of income-driven payments on their loans and then have the rest forgiven.But the program’s rules are complex — so much so that we have a whole training course dedicated to getting it right — and when the first borrowers became eligible for forgiveness 10 years after the program’s start in 2007, hardly anyone who applied for loan discharge was able to get it processed.In fact, as of September 2018, onlyout of more than 40,000 applicants had had their loans forgiven.Not good.
TEPSLF is, well, aopportunity to access a (slightly)eligibility pool for PSLF. It’s controversial right now because congressional Democrats are arguing that the Republican-controlled Department of Education hasn’t expanded the pool enough. Maybe it’ll expand further and maybe it won’t, but for the moment, the “expanded” part refers to the types of repayment programs that are eligible for forgiveness.
Remember, it took 10 years for the first possible qualifiers to apply to have their loans forgiven, so that was in 2017. When news started to break that 99% of PSLF applicants were being denied due to not meeting requirements, it became a major scandal.Due to a big push from Senator Elizabeth Warren and other student-debt advocates in Congress like senators Sheldon Whitehouse and Tim Kaine, the 2018 U.S. budget included a pot of $350 million to aid borrowers who hadn’t met the PSLF requirements, but would meet an “expanded” definition.The money is finite, and will eventually run out — so it’s on a first come, first served basis. Hence, . However, not much of it has been used so far due to another round of eligibility issues, so there’s a good chance that if you qualify, you’ll be able to use it.
First of all, you should know that TEPSLF hasn’t gone so great so far. Nearly everyone who applied for it in 2018 was rejected — and I do mean nearly everyone. Only a couple hundred out of literally tens of thousands of applicants were accepted.In other words, there’s still a lot of difficulty in getting your loans forgiven under the new rules. Before I go any further, here’s a link to the Department of Education’s TEPSLF website, which addresses some of these issues too.The current focus of TEPSLF is on people who were in the wrong kind of repayment plan. Original-flavor PSLF required that borrowers be on one of the income-driven repayment plans: PAYE (Pay As You Earn), REPAYE (Revised Pay As You Earn), IBR (Income-Based Repayment), or ICR (Income-Contingent Repayment).All of these plans tie the amount of your payments to your income, and since public service incomes are generally lower, it made sense that lots of PSLF applicants would be on one. But it turned out this often isn’t the case and lots of people were rejected for being on another payment plan.TEPSLF expands the kind of eligible repayment plans. If you have been using a Graduated Repayment Plan, an Extended Repayment Plan, a Consolidation Standard Repayment Plan, or a Consolidation Graduated Repayment Plan, you’re now eligible as long as you meet all the other PSLF requirements.
It’s not just the kind of repayment plan you have though. You also have to go through a very specific procedure to have your loans forgiven under TEPSLF.So here’s the skinny. In order to get access to TEPSLF: you can go on to apply for TEPSLF.
As with PSLF,Direct Loans qualify for TEPSLF. If you had other loans but were able to consolidate them into a Direct Loan, that’s ok, but only payments you made on the Direct Loan will count.Parent PLUS loans, FFEL loans, Perkins Loans, and private loans are not eligible.Direct Loans in default are also not eligible.
First, if you haven’t already made 10 years of payments while working for an approved employer, applied for PSLF, and been denied, you’ll need to do all those things.That means your first stop should probably be FedLoan Servicing to ensure that your employers have been certified.Next, you’ll need to apply for PSLF and wait to be denied. The denial has to be because you were using the wrong repayment plan for part or all of your 120 payments.Then you send the Education Department an email. No, really! You do! I assumed there was a form to fill out, but nope:Then, wait for FedLoan Servicing to reply to you. They’re required to confirm that you are eligible and to email you back with a determination. This might take several months (they say 60 to 120 days). You may be asked for additional information, especially about your income in the last 12 months, your family size, or your employer.(They might want to know about your income or family size because they want to determine whether or not your recent payments were at least as much as they would have been on an income-based repayment program, which is one of the markers of eligibility for TEPSLF.)If they do ask you for more info, move on it quickly, because you’ll need to provide it in 21 days or your request will be canceled.If you’re denied, you may need to follow up with more information if you want to appeal. The denial ought to come with a reason and also an explanation of what you should do next. That may include submitting a PSLF application, making further payments (if you don’t have 10 eligible years’ worth), and/or getting your employer certified (which means following up with FedLoan Servicing and your employers during the 10-year period).If you’re approved, that should be it. Your loans will be forgiven, along with any outstanding interest, and you can log into your account and see a $0.
This is a big deal! If your loans are forgiven under either PSLF or TEPSLF, the forgiveness amount is not considered taxable income.
Like I said, the implementation of this program has been messy and contested. But it has worked for highly organized, persistent people who do meet all of these requirements. Here’s one story of a woman who not only got her loans forgiven, but got nine months of “overpayment” refunded to her. That ought to be inspirational!One thing I really noted in that story is that while it’s really frustrating to deal with servicers, it can have benefits to keep pushing them. The woman in the story called her servicer maybe 20 times to check on things, insist that they look further into her situation, get documentation, and so on.That sounds awful and it really sucks that it’s this challenging to access the program. But on the other hand, which would you rather do: call FedLoan Servicing 20 times or pay on your student loans for another 5 years when you don’t have to?Here is another takeaway from that story: If you can afford it, it might help to hire a professional to assess your situation and help you make a plan. The woman in the story used a student loan lawyer. She still had to do a lot of the work of calling the servicer, etc., but it must have been comforting to have an expert on her side.
As of April 2019, the Trump administration and several congressional Republicans have proposed eliminating it altogether.Meanwhile, the major Democratic presidential contenders have mostly signaled support for a bill introduced by one of them, Senator Kirsten Gillibrand, which would expand the types of eligible loans and payment plans permanently and reduce the payment period from 10 years to 5, among other things. (There are also some requirements for better information from the Education Department to students and an online application system that would be easier and clearer to use, etc.)It definitely seems like PSLF has become a partisan issue, with Democrats trying to expand the program to more borrowers and Republicans trying to prevent borrowers from accessing it. This didn’t used to be the case — PSLF was signed into law by George Bush and the Obama education department didn’t exactly do a great job of keeping servicers from misbehaving — but unfortunately, it does seem now like the program has become a political football, meaning that its future probably depends a lot on who wins Congress and the presidency in 2020.