Guide to the New Public Service Loan Forgiveness Program: What to Know

It's essential to stay informed about any updates or changes to the PSLF program, as it has faced some challenges in implementation in the past.

New rules for the PSLF program have started. The Department of Education announced permanent improvements that went into effect July 2023 to the PSLF program through updated regulations. These regulations eliminate many unnecessary barriers to obtaining PSLF credit, helping many more borrowers working in public service reach forgiveness in the future.

A summary of improvements to the PSLF program:

1. Having payments count after consolidation. Under current rules, borrowers lose all progress toward forgiveness when they consolidate. With the new regulations, for example, a borrower with 60 qualifying payments on Direct Loan with a balance of $30,000 who consolidates their loan with another Direct Loan with a balance of $30,000 with 0 qualifying payments will have a new payment count of 30 payments. Borrowers will receive a weighted average of existing qualifying payments toward PSLF when they consolidate their Direct Loans.

2. Count certain periods in deferment or forbearance toward PSLF to avoid instances where a borrower may have faced confusing choices about pausing payments or getting credit toward PSLF. These periods include:

• Cancer treatment deferment
• Military service deferment
• Post-active-duty student deferment
• Economic hardship deferment, which includes service in the Peace Corps
• AmeriCorps and National Guard service forbearances
• U.S. Department of Defense Student Loan Repayment Program forbearance
• Administrative or mandatory administrative forbearances

3. Borrowers are able to buy back time to count towards 120 payments. Allowing borrowers to receive credit toward PSLF on payments that are made late, in installments, or in a lump sum. Prior rules only counted a payment as eligible if it was made in full within 15 days of its due date.

4. Expanded employment criteria to count toward public service loan forgiveness. Require employers, for purposes of PSLF, to give adjunct and contingent faculty credit of at least 3.35 hours of work for every credit hour taught. Allow a qualifying employer to certify employment for a contractor if that individual is providing services that by State law cannot be filled or provided by an employee of that organization.

5. Relaxed rules for counting payments toward public service loan forgiveness. Borrowers will be able to access a hold harmless option to have other periods of deferment and forbearance potentially counted toward PSLF if they make payments equivalent to what they would have owed at the time. This includes getting credit for periods during which the borrower would have had a $0 payment. The Department of Education formalized the reconsideration process for borrowers to have their applications reviewed again if there are errors made in review.

The improved PSLF regulations and upcoming one-time account adjustment will deliver many significant benefits to PSLF applicants by helping address past servicing problems, clarifying the PSLF rules that previously excluded certain borrowers from forgiveness, and helping build the PSLF program that our borrowers who work in public service deserve.

Need help with what options are best for you? Get in touch with us.