Employer verification: the lynchpin of PSLF

The week of Christmas, the NYTimes published a story about people who anticipated their loans being forgiven this year with PSLF and are now in the midst of a legal battle instead.

The suit, filed in United States District Court for the District of Columbia, says some borrowers received approval on their certification forms, then, years later, the entity servicing their loans reversed course, effectively ousting them from the program.

It did so retroactively, meaning that none of the previous loan payments counted toward the 120 payments needed to qualify for forgiveness. So if the borrowers took a job that qualified, they would have to start again with accumulating the payments.

The silver lining is that—though not 100% clear from the article—it appears these denials were all for jobs that were not 501(c)(3) non-profits. They were for other non-501(c)(3) non-profit jobs, which only count toward PSLF when they provide certain types of qualifying public services and are approved on a case by case basis. I have no doubt there are doctors who are planning on PSLF that will find themselves shocked and disappointed by technicalities, but so far there’s no evidence that the usual employment catchalls (government or 501(c)(3) organizations) for PSLF will be spontaneously denied.

These are eligibility criteria for PSLF-eligible employers:

  • Government organizations at any level (federal, state, local, or tribal)
  • Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
  • Other types of not-for-profit organizations that provide certain types of qualifying public services and must not be a business organized for profit, a labor union, a partisan political organization, or an organization engaged in religious activities.

Qualifying public services include:

  • Emergency management
  • Military service
  • Public safety
  • Law enforcement
  • Public interest law services
  • Early childhood education (including licensed or regulated health care, Head Start, and State-funded pre-kindergarten)
  • Public service for individuals with disabilities and the elderly
  • Public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in health care practitioner occupations and health care support occupations, as such terms are defined by the Bureau of Labor Statistics)
  • Public education
  • Public library services
  • School library or other school-based services

So, it is the private nonprofits offering “qualifying” services that are the category at greatest risk for being denied. If your job isn’t a 501(c)(3) but “should” qualify, submit your employment verification forms annually to prevent wasting your time and money planning for forgiveness that may forever remain out of reach.

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