On October 6, 2021, the United States Department of Education announced a temporary waiver to allow borrowers to receive credit for federal student loan payments that previously did not qualify for the public service loan forgiveness program (PSLF). The waiver has created a large amount of new interest and attention in the program for good reason - many who could have benefitted from PSLF in the past were not aware of it, did not think it could apply to them, or were not directed to a qualifying payment plan. The waiver retroactively expands the types of repayment plans that a borrower can be on and still qualify for loan forgiveness, allowing a significantly larger number of people to qualify. If you have federal student loans, could you benefit?
PSLF was started in 2007 to encourage students to enter relatively lower paying jobs in public service. After ten years (120 payments) of qualifying full-time work while paying on a qualifying payment plan, the remainder of the borrower’s federal student loan balance is discharged. Qualifying employment includes any government organization or not-for-profit organization that is tax-exempt under Section 501(c)(3) of the Internal Revenue Code. This includes many hospitals, including academic institutions.
Qualifying payment plans are in general income based, but during the limited waiver, payments made on any payment plan are valid, as long as you worked full time for a qualifying employer at that time. Time when borrowers were not required to make payments due to the Federal COVID-19 Relief forbearance count as well.
An early career anesthesiologist has $100,000 of federal student loans and finished four years of residency followed by one year of fellowship in 2016, all at a qualifying employer. They paid on their student loans under ANY payment plan during the five years of training. They work as an attending anesthesiologist at an academic medical center in California after training and continue to pay on their federal student loans under ANY payment plan. They have made no payments on their student loans since March, 2020, when their loans were placed in zero interest forbearance due to the COVID-19 Relief forbearance. The remainder of their federal student loans could qualify to be discharged under the PSLF temporary waiver, since they have made 10 years of payments while working for a qualifying employer.
How to Get Started
The most important first step is to verify that an employer qualifies under the PSLF program. Some physician groups will not count, even if that group works at a non-profit hospital. It matters what tax ID number is on your paycheck. Studentaid.gov has a very helpful PSLF Help Tool that allows you to enter the tax ID number on your W2 or paycheck to see if it qualifies. You can then quickly ascertain if you have enough years of qualifying employment. The PSLF help tool will also guide you through the steps of qualifying for loan forgiveness, which involves getting signed employment verification forms for all the years of past employment and transferring loans to the government’s PSLF loan servicer MOHELA. While starting the process is daunting, this is a once in a lifetime opportunity that I hope many hard-working anesthesiologists can benefit from. The deadline for the limited time PSLF waiver is October 31, 2022.