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February 27, 2022

Public Service Loan Forgiveness

Denied Applicants May Want to Reapply – But You Must Act Soon!

New Department of Education rules allow previously ineligible payments to now be eligible to count toward forgiveness.

New Department of Education rules allow previously ineligible payments to now be eligible to count toward forgiveness.

Two decades ago, critical government and public service positions nationwide, including legal positions, were going unfilled or experiencing high turnover. Prosecutors, defense attorneys, teachers, health providers, and other public service workers were in short supply.

Congress responded in 2007 by passing the Public Service Loan Forgiveness (PSLF) program, which created an economic incentive for professionals willing to make a long-term commitment to public sector careers. The program authorizes the forgiveness of any remaining federal student loan debt for individuals who have worked full time in government or at an eligible non-profit organization doing public service work and made at least 120 monthly payments on time.

The ABA has been advocating for PSLF since before its creation in 2002, and our steadfast support continues today. The program provides a financial tool to support government and nonprofit service providers who help ensure the delivery of vital services to the public, no matter how rural or under resourced a community is. It is also a recruitment and retention tool that helps reduce student loan debt obligations for eligible professions, including public service lawyers.

Last September, the ABA hosted a Student Debt Week of Action where thousands of social media posts and messages to Congress helped highlight the critical need for student debt relief and improvements to the PSLF program. Working with The Coalition to Preserve PSLF, our members also contributed to the more than 45,000 responses sent to the Department of Education by its September deadline for public input on the PSLF program.

For many, Department of Education regulations implementing the PSLF program have been confusing and retaining eligibility through ten years of public service has proven difficult. This lack of clear guidance has resulted in denied applications for most people. Recent changes, however, have given hope and loan forgiveness to many, including those previously denied access to this valuable public service incentive. But eligible borrowers must act soon because some changes are only temporary.

The month following our Student Debt Week of Action, the Department of Education announced plans to overhaul PSLF to make it easier for borrowers to understand and access the PSLF program. The Department’s fact sheet dated Oct. 6, 2021, outlines significant changes to the program rules, including a limited waiver of some of the prior requirements that will be in effect only through Oct. 31, 2022. 

The new rules allow eligible borrowers to count payments made on certain federal loans and repayment plans that were previously deemed ineligible to qualify as payments for loan forgiveness. For example, if borrowers did not receive credit for federal loan payments because the payments were: 

  • not made on an eligible type of loan (previously only Federal Direct Loans were eligible),
  • not made on an eligible repayment plan (previously only Income-Driven Repayment plans were eligible), or
  • not made on time or were made for incorrect amounts;

then they may be eligible to receive retroactive credit for such payments if they take action before the Oct. 31 deadline

But, are the new rules making a difference?  Absolutely!  We are hearing reports of federal student loan borrowers becoming eligible for PSLF months earlier than expected and previously denied borrowers reapplying (even those denied multiple times) and finally getting approved for loan forgiveness. 

For those eligible or hoping to become eligible for PSLF, thank you for your 10 years of public service. For anyone needing more information on these recent developments, this article highlights only some of the changes. To learn more about the new PSLF qualifying rules and what’s changed under the limited waiver, visit here.  Don’t forget to scroll down for the frequently asked questions, and good luck!

Follow us @ABAGrassroots to track further developments.

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