Reboot Your LifeTampa Student Loan and Bankruptcy Attorney Blog

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We are happy to share our thoughts on the new Public Service Loan Forgiveness Waiver announced last month.  It truly will fix most all of the problems with the PSLF program and we have already seen many clients benefit!

I was asked to present a webinar for the Florida Bar this week and over 500 people registered.  That’s a 10x of their usual number of 50.  Lots of demand to understand a new and important way to forgive student loan debt.  And you have until October 31, 2022 to act.  While that may seem like a long time away, a year goes by fast and why wait.  Why not get this done now and be done with these loans if you’ve already made 120 payments but found that many if not most never qualified.  They are likely to qualify now, provided you worked full time for a government agency or a qualifying non-profit.

There’s a lesser discussed requirement for TEPSLF: If the borrower is not in an IDR plan at the time they apply for TEPSLF, the previous 12 months of payments and the last payment made have to be at least as much as they would have paid in an IDR plan.  If they weren’t, the borrower would have to make potentially higher payments for a year in an IDR plan before they rec’d forgiveness.

However, if the borrower has been in the Covid Forbearance since March 2020 and they filed for TEPSLF now, they would meet that requirement because everything has been set to $0. They would need to file before the Covid Forbearance is over (1/31/2022) to avoid this issue with TEPSLF.

Also Note: The PSLF Temporary Waiver makes TEPSLF unnecessary for now as all repayment plans are eligible.  If a borrower wasn’t ready for TEPSLF until after 1/31/2022, they may be eligible through the Waiver.

A longstanding problem has plagued PSLF borrowers when they try to get their 120 payments calculated for public service student loan forgiveness.  Lost records, payments not counting b/c they were for the wrong amount even by a few pennies, paid ahead status, wrong payment plans, change in servicers, multiple year long delays —  I could go on and on…. This week’s announcement by ED that it will start to more broadly interpret the rules surrounding what a qualifying payment is will help tremendously.  Here’s some insight into what we may start to see shortly:

Ian Foss of US ED offered some interesting details during Wednesday’s negotiated rulemaking as he explained the emergency action, and what changes they hope to make permanent. If we understood him correctly they want to get away from counting payments completely and simply give credit for months since entering repayment on any FFEL or DL. This is the result of counting all payment plans, as well as some/all deferments, and maybe even forbearance periods. This approach would also solve all the problems created by the 15-day on-time right-amount payment rule, for all those who were told the wrong payment amount, made lump sum payments from assistance programs, etc.

As things stand now, we aren’t seeing any help out there along these lines for those with Parent Plus loans or Spousal FFEL Consolidation loans — YET.  Stay tuned…