Will I qualify for PSLF?

After some high profile new stories about the initial 99% rejection rate for PSLF application, I wrote back in 2018 about how using that number as a means of summarizing the PSLF program was essentially clickbait.

I still see the 99% figure used all the time by ill-informed people in arguments about how everyone should abandon all hope and rush to the arms of an immediate private refinance without any consideration of critically important details such as the size of an individual’s crippling debt or how that relates to their current or expected income. Dunning-Kruger in action.

That said, the high rejection rate does illustrate the need for due diligence and careful planning, because what it really signifies is a lot of people’s general lack of attention to detail when it comes to critically important financial matters (e.g. the impact of investment fees on retirement planning):

Wrong loans. Wrong repayment plan. Wrong/unconfirmed number of payments. And (more rarely) wrong job.

A small fraction of that 99% also probably included some people who actually did know better but we’re hoping for a windfall. No harm in asking right?

Current borrower, the program is safe

If you’ve already borrowed loans, you’ll note that the master promissory note you signed includes this:

A Public Service Loan Forgiveness (PSLF) program is also available. Under this program, we will forgive the remaining balance due on your eligible Direct Loan Program loans after you have made 120 payments on those loans (after October 1, 2007) under certain repayment plans while you are employed full-time in certain public service jobs. The required 120 payments do not have to be consecutive. Qualifying repayment plans include the REPAYE Plan, the PAYE Plan, the IBR Plan, the ICR Plan, and the Standard Repayment Plan with a 10-year repayment period.

The MPN is a binding contract between you and the lender (the federal government). It cannot be legally changed. This is why all new proposals, from the Obama-era PSLF cap to the Trump’s hoped abolition, have always specifically excluded current borrowers. They have to. To change the rules of the game for an old borrower runs afoul of the common law doctrine of estoppel. In layman’s terms, you can’t go back on your word.

I know that sounds good in theory, but everyone who reads internet forums, social media, or the annual PSLF clickbait articles (even from major news outlets) is leery. Thankfully, there’s already some existing case law!

The Department of Education under Trump-appointee Betsy DeVos could at best be charitably described as the perfect example of how cabinet-level executive departments can be politically undermined while being used as political bait for horrible and/or clueless people. Under DeVos, the DOE did try to change the rules after the fact for a tiny number of people with non-501(c)(3) nonprofit jobs that did (and then “did not”) provide qualifying services. These jobs are approved on a case by case basis by FedLoan, and the DOE tried to retroactively undo FedLoan’s approvals.

So how did it turn out? The government basically lost. You can’t do that. I explained the details of the case here (I think they’re interesting).

The PSLF program is an entitlement. Entitlements are hard to change and hard to get rid of, and you can’t simply pull the rug out from under folks who made decisions based on you holding up your end of the bargain.

So, with that long preamble, I’d like to answer the question at the title of this post:

Will I qualify for PSLF?

I’ll answer with another question:

Well, are you doing the things that it says on literally every single document that you need to do?

Then yes!

After a 10+ year boondoggle of administrative suffering, you too can enjoy your free money.

You need:

  • Qualifying loans (Direct, not FFEL)
  • Qualifying repayment plan (REPAYE, PAYE, IBR, ICR, or 10-year Standard)
  • Qualifying full-time employment (Government or 501(c)(3) non-profit are the most straightforward)
  • 120 on-time monthly payments

That’s it.

You don’t need to wonder; you should know at every point during the process. Check out the Official PSLF Help Tool. If you have any doubts, keep submitting those employment certification forms to FedLoan. If there’s an unanticipated problem, you can find out within months. Unless you’re trying to get a non-501(c)(3) non-profit job approved (like in that lawsuit), there really shouldn’t be any question.

Yes, FedLoan can be terrible. And yes, sometimes you need to submit a CFPB complaint to get those manual payment recounts done when it seems that basic arithmetic is beyond their reach. No one said the process was pleasant.

But at this point, no one else needs to be surprised after a decade.


Charlie 03.29.20 Reply

Hi Dr. White, my friends said to file an income tax of $0 to help with PSLF payments the first year, but my parents listed me as a dependent on their taxes. Can I still go ahead and file? Is there an IRS document that speaks to this? Thanks!!!

Really really appreciate the blog. The alexa score is high (probably due to the great content you put out)

Ben 03.31.20 Reply

You can still file. In fact, the IRS encourages it because you could still get a refund: https://www.irs.gov/publications/p501#en_US_2019_publink1000220708

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