How to Qualify for Civil Service Loan Forgiveness
While student loan forgiveness may be on hold, the administration has taken steps to reform debt relief programs that already exist. The Department of Education revamped the Public Service Loan Forgiveness Program (PSLF), which was launched under the Bush administration in 2007. The program is designed to reduce student debt for graduates who continue to work in a range of government, non-profit, and healthcare jobs. ; see below for a list and more details.
Announced last October, the new rules include a limited waiver of requirements that allows eligible borrowers to have payments that were previously excluded counted for loan forgiveness. The waiver expires on October 31 of this year. To see if you qualify, go to studentaid.gov/pslf/ to use the PSLF helper tool, which will generate the form you need. And make sure you have your old W-2 forms handy. To see if your employers – past and present – are eligible or not, you will need to enter the employer’s tax identification number found in box b of your W-2. For more information about the tool and how to use it, go to studentaid.gov/articles/become-a-pslf-help-tool-ninja/.
The waiver appears to have worked as it should for at least one former debtor. Ricardo Maldonado from New York tweeted recently how approximately $139,000 of his federal student loans (related to a graduate degree) were forgiven through the PSLF waiver. Maldonado applied for a pardon in November 2021. After applying, he received letters informing him of the process and received an official pardon notice on May 31, 2022.
Maldonado says the PSLF form was easy to manage for himself thanks to having only one employer for the past 15 years, but most importantly “[It] was helpful to see people say that [forgiveness] was possible,” he said via a direct message on Twitter.
What was wrong with the cancellation of civil service loans?
Student loan holders who work in eligible nonprofit or government jobs may have their loan forgiven after ten years of qualifying loan program payments. These payments can be adjusted according to the income level of the borrowers.
The first borrowers would have been eligible for the rebate in October 2017 (remember, the program was launched in 2007). But four months before that, the Consumer Financial Protection Bureau reported issues: “Borrowers report that service agents delay or deny access to loan cancellation due to incorrect information about their loans, faulty payment processing and failed employment certifications.”
A major complication concerns the origin of federal student loans. Prior to 2010, federally guaranteed student loans were issued by financial institutions and not directly by the federal government. The PSLF only applies to direct student loans or those issued by the federal government. Previous loans could be consolidated into direct loans, and payments made after this consolidation would apply to the PSLF.
Who is eligible for civil service loan forgiveness?
The PSLF program covers a wide range of jobs, including virtually all direct government jobs (whether federal, state, local, or tribal). Many jobs in non-profit organizations as well as public health work are also eligible. Some exceptions include trade unions or partisan political organizations. Members of Congress are also specifically excluded. The program also has provisions that the work must be full-time (at least 30 hours per week), although this can be through multiple jobs with qualified employers.
- Emergency management
- Military service: service in the U.S. Armed Forces or National Guard
- public safety
- Law enforcement: crime prevention, crime control or reduction, or criminal law enforcement
- Public interest legal services: legal services provided by an organization funded in whole or in part by a local, state, federal, or tribal government
- Early childhood education, including licensed or regulated child care, Head Start, and publicly funded preschool
- Public service for people with disabilities and the elderly
- Public health including:
- Nurse practitioners
- Nurses in a clinical setting
- Full-time professionals engaged in occupations of health practitioners, health support occupations and counsellors, social workers and other specialist occupations in community and social services, as such terms are defined by the Bureau of Labor Statistics
- Public library services
- School library or other school services
More details are available at: https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service/questions.