The Public Service Loan Forgiveness (PSLF) program was never in my cards based on the first job I would be taking after finishing my anesthesia training. Although maybe a little jealous, I was happy for some close friends who were taking advantage of the program to help pay off a portion of their massive debt.
PSLF is a United States government program that was created to provide a way out of the federal student loan debt burden. The program requires Direct Loan borrowers to make 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer. After meeting the payment requirement, the remaining balance on the borrower’s federal direct student loans will be forgiven.
You can see why this could be very alluring.
While the PSLF program can be a valuable resource for healthcare professionals who choose to work in public service, there are some common mistakes that borrowers make when participating in the program. These mistakes can lead to delays in loan forgiveness or even disqualification from the program. Here are some common mistakes to avoid:
5 Mistakes Made with Public Service Loan Forgiveness (PSLF) program
1. Failing To Work For A Qualifying Employer
It’s not enough to simply be in public service. The PSLF program has specific requirements about the types of employers that qualify. This typically includes government organizations (federal, state, local, or tribal) and non-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code. Other types of non-profit organizations can qualify as long as they provide certain specified public services. This means you need to verify your employer’s status before counting on loan forgiveness. If your job does not fall under these categories, your work will not count toward PSLF, regardless of the nature of the job or your responsibilities.
2. Failing To Make Qualifying Payments
Under PSLF, it’s not just about making 120 payments, but these payments must be “qualifying payments.” They must be made after October 1, 2007, under a qualifying repayment plan (generally an income-driven repayment plan), for the full amount due as shown on your bill, no later than 15 days after your due date, and while you are employed full-time by a qualifying employer. Therefore, missed payments, late payments, or payments made while not working for a qualifying employer do not count toward the required 120 payments.
3. Failing To Submit The PSLF Form
This PSLF certification and application form is crucial as it is used to confirm that your job qualifies for the program. It’s recommended that borrowers submit this form annually or whenever they change jobs to keep track of their progress towards making the qualifying payments. Failure to submit these forms in a timely and accurate manner can result in miscounted payments and unnecessary delays in achieving loan forgiveness.
An extremely convenient method to handle this is by utilizing the PSLF help tool. This digital assistant guides you through the process, making it straightforward and efficient. By following the prompts provided by the PSLF help tool, you can a.) confirm the eligibility of your employer, b.) complete the entire form without the need for handwriting or manual typing, and c.) generate a separate form for each employer you have.
4. Not Consolidating Non-qualifying Loans
Not all federal loans qualify for PSLF. Only loans received under the William D. Ford Federal Direct Loan Program are eligible. However, other federal loans, specifically those from the Federal Family Education Loan (FFEL) Program and the Federal Perkins Loan Program, can become eligible if you consolidate them into a Direct Consolidation Loan. Many borrowers make the mistake of assuming all federal loans qualify, only to learn later that they don’t, after wasting years of potential qualifying payments.
5. Not Staying On Top Of Paperwork
Like any federal program, PSLF comes with its share of paperwork. This can include employment certification forms, income and family size documentation for income-driven repayment plans, and the final PSLF application once you’ve made your 120 qualifying payments. Failing to stay on top of this paperwork can lead to missed deadlines, incorrect payment counts, and even denial of loan forgiveness. Therefore, it’s crucial to stay organized, keep copies of all documentation, and be proactive about submitting paperwork on time.
Remember, it’s your responsibility to ensure you’re meeting the PSLF requirements, so regular check-ins and ongoing documentation are crucial
