Understanding the Public Service Loan Forgiveness (PSLF) Waiver
What Is The Public Service Loan Forgiveness Waiver?
In October of 2021, the U.S. Department of Education introduced an emergency waiver that temporarily expands the breadth of who qualifies for Public Service Loan Forgiveness (PSLF). This waiver provides an opportunity for some borrowers to receive credit for payments that were not previously eligible and count them towards the 120 needed to qualify for PSLF.
Previously, a physician could enroll in an income-driven repayment plan and work for a teaching hospital (or other 501(c)(3) institution or government entity), but if their underlying loans were Perkins or FFEL, their payments would not count towards the 120 needed for Public Service Loan Forgiveness.
Another requirement for forgiveness has continued to be enrollment in an Income-Driven Repayment Plan such as ICR, IBR, PAYE & REPAYE. Even if you had the correct Federal Direct Loans to qualify and were working for a teaching hospital, payments wouldn’t count towards the 120 if you were in another repayment plan such as Standard, Extended, or Graduated.
What can you do today if you fall within this category?
Physicians can now* retroactively apply years worked at a 501(c)(3) non-profit teaching hospital while in residency if they were working full-time and were in some form of active repayment. This unfortunately does not include anyone who was in an elective deferment/forbearance prior to March of 2020.
*This waiver extends until October 2022, at which point the rules will revert to requiring Federal Direct Loans to be in an Income-Driven Repayment Plan through the Designated Loan Servicer to qualify.
What if I refinanced in the past few years because I learned I wasn’t on track for PSLF?
There are many physicians who discovered their payments did not qualify for loan forgiveness during training due to one of the reasons mentioned above. Based on their loan balance and without any years of accrued payments, some made the decision to refinance the loan to pay it off more aggressively & efficiently. Unfortunately, because these dollars are no longer with the federal government, this refinance cannot be retroactively applied.
Where to Start
For those interested in exploring Public Student Loan Forgiveness, keep in mind that Direct Consolidations, Employment Certification forms, and enrolling in an Income-Driven Repayment plan may all be required for payments to qualify. We recommend connecting with a professional to answer questions, walk you through these steps, and help make sure you’re on track.
To schedule a no-obligation, introductory conversation with our Financial Advisor specializing in Student Loan Guidance, Kyle Flynn, CSLP, use his calendar link here or the button below. Kyle provides financial planning services with a focus on your current financial position and debt management. We also invite you to attend one of our upcoming webinars about Student Loan Repayment & Forgiveness for early-career physicians.
Kyle is a registered representative and investment advisor representative of Securian Financial Services Inc.