If you are on your way to Public service loan remission, the current COVID-19 crisis may have completely upended your plans. On-time payments are a requirement for PSLF, and if payments are not currently required, what impact does this have on your path to forgiveness?
The short answer is, you can still qualify for the PSLF even if you aren’t making payments right now. Here is how the PSLF works during this federal forbearance period.
PSLF is included in the current administrative abstention
Currently, most student loans held by the federal government are in administrative tolerance until September 30, 2021 – meaning payments are not required, interest rates are set at 0% and collection activities are halted. This forbearance period came into effect automatically for federal student loans on March 20, 2020.
Of course, forgiveness of civil service loans requires borrowers to make 120 continuous payments to be eligible. However, the government has also made concessions here. If you are not currently making payments on your student loans but are working for an eligible employer, you will still receive credit for extended temporary PSLF or PSLF as if you had made the payments – in other words, they are counted. as payments of $ 0. .
To ensure that these credits take place, you will need to submit a PSLF form that certifies your employment for the same period as the federal student loan suspension. If you have reached your 120 qualifying payments during the suspension period, you can still apply for the PSLF.
That said, if you have lost your job with an eligible employer or if you work less than 30 hours with an eligible employer, that time will not count towards the PSLF. Keep in mind that you do not entirely lose your PSLF eligibility; it might just take longer to qualify for forgiveness.
Should you stop paying if you sue PSLF?
While continue to repay your student loans While administrative forbearance can help you repay them faster, it may not be the best solution if you are suing PSLF. Since you will get credit for this period regardless of whether you make those payments or not, you might as well keep this money in your pocket, as continuing to make payments will only reduce the amount that is forgiven.
Instead, you might want to use that money for other urgent needs, like paying off debts, staying up to date on house payments, keeping the lights on, or paying for food. The purpose of the suspension of student loan payments is to prevent you from having to choose between student loan payments and basic survival. If you have the money and need a place to put it, consider putting money into an emergency fund or even helping other people who can’t afford the necessities. moment.
How to stay on track for the PSLF
If you take advantage of suspended federal student loan payments, you will need to fill out a PSLF form that certifies your employment during the period of suspension. You will see your eligible payments updated when you complete your employment certifications.
If you have lost your job or are facing reduced hours due to the COVID-19 crisis, you are likely facing a PSLF setback right now, as you will still need to meet the PSLF basic criteria for that your payments be suspended. to count. However, reducing your hours during this time does not mean that you will lose your eligibility – as soon as you meet the requirements again, your qualifying payments will pick up where they left off.
Note that the grace period, school and certain deferment, forbearance and bankruptcy statuses are still not eligible for the remission of civil service loans during the administrative forbearance period.
Biden could expand PSLF program
Even if you don’t qualify for the PSLF now – it’s currently designed for teachers, government employees, and nonprofit workers – you may be able to access this program soon.
In addition to more flexible eligibility conditions for the PSLF, President Biden proposed a new debt relief route, which would write off up to $ 10,000 in undergraduate or graduate student loan debt for each year of qualifying national or community service, up to five years. This is different from the current program, which cancels any remaining debt after 10 years of payments.
It’s important to note that private student loans will remain ineligible for the PSLF even if Biden’s changes are successful. However, one of Biden’s proposals is to allow the release of private student loans in bankruptcy, which could be a form of relief.