August 11, 2021

Public Service Loan Forgiveness: What You Need to Know Before The New Year


The Public Service Loan Forgiveness (PSLF) is a federal student debt relief program that allows people to work in qualifying public service positions instead of higher-paying jobs to pay off their student loan debts.

Under the PSLF program, you are eligible to have any of your remaining Federal Direct Loans forgiven after making 120 qualifying loan payments over ten years. These payments are made under a repayment plan while working full-time for a qualifying employer.

When the COVID-19 pandemic hit the U.S. last March 2020, the federal government gave borrowers a break on student loan payments. The Department of Education scheduled the payment pause for student loan borrowers to end on February 1, 2022

Here’s what you need to know about the PSLF’s January 31st deadline.

The PSLF Program During the COVID-19 Pandemic

The Coronavirus Aid, Relief, and Economic Security (CARES) Act included a provision that suspends the requirement for monthly PSLF payments and gives full credit for those months.

If you are a student loan borrower seeking PSLF, you do not need to make payments until the extended automatic forbearance expires on February 1st. You will still earn credit for PSLF purposes as long as you work full-time for an eligible employer during the suspension period.

This means that even if you are not paying your student loans, those months of nonpayments will still count toward earning Public Service Loan Forgiveness.

If Congress or the President has not taken action on February 1st to extend the relief, student borrowers can expect the repayment requirements to resume.

What Student Loan Borrowers Can Do

Borrowers should ensure that their student loan servicer has their current contact information. You will also want to notify your servicer if your banking information has changed, especially if you were enrolled in automatic payments.

Setting aside some money when payments resume can make the transition less painful. However, making payments can be difficult for those who are still unemployed or dealing with financial hardships. If you cannot afford to start paying in October, you still have other options.

  • Send a request for unemployment deferment or economic hardship. You cannot accrue interest under them, making them ideal ways to postpone your payments.
  • If you do not qualify for those two, you can use forbearance to keep suspending your bills. However, the interest will accumulate and the balance will be larger when you resume payment.
  • You can also enroll in an income-driven repayment plan to make payments more affordable. These programs cap borrowers’ monthly bills at a percentage of their discretionary income and forgive their remaining debt after 20 or 25 years.
  • To decide on the right payment plan, review your available options and find one that best fits your current situation.
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