Demystifying PSLF:

Student loan workshop

Watch the recording March 4, 2024

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Today's focus

• Taking stock of your loans
• Repayment plans
• PSLF rules & forms
• Navigating MOHELA
• Problems & disputes
• Q&A

Reviewing your loans

studentaid.gov

• Studentaid.gov is the official Federal Student Aid website. Federal Student Aid manages federal loans, grants, and work study.

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• Go here first! Central hub with info like:
• Loan types
• Loan balances
• Loan servicer(s)
• IDR application
• PSLF Forms
• Repayment simulators

Repayment plans

Types of repayment plans

IDR basics

• If you're doing PSLF, you want to be in an IDR plan.
• Payments based on income, not loan debt.
• Reduces your monthly payment by up to $1,000s / month.
• Allows you to pay as low as $0 / month and still qualify for loan forgiveness.

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New SAVE plan

• New IDR plan with lowest monthly payments possible
• No unpaid interest accrual = removes the risk of loan growth
• Your monthly payment will go toward interest. Any remaining interest is waived.
• If your loan balance is high, you can expect your loan balance to stay the same while in SAVE.

SAVE in practice

Assumptions: $200,000 borrowed; $1,000 in interest accrues monthly; $70k income.

Over 10 years...

Assumptions: $200,000 borrowed; $1,000 in interest accrues monthly; $70k starting income.

IDR income

• Generally, IDR plans are based on your most recent tax return
• It's ok if your income has increased – Dep't of Ed doesn't care
• Methods for making your IDR income lower:
• You can file taxes separately if you're married
• Bigger household size = smaller payments
• IDR is based on AGI, so if you contribute to retirement, your AGI may be lower
• Always provide whatever is lowest: most recent tax return or current pay stub
• You do not need to tell the Dep't of Ed that your income has changed
• IDR recertifications & PSLF Forms are not related

IDR recertification

• Haven't recertified since before March 2020? That's ok!
• Note your recertification date on studentaid.gov and/or your loan servicer's website
• If you're in an existing IDR plan, your next recertification date should be after September 2024 (just announced 3/1)
• Moving forward, annual recertifications are required
• Expect your payment to increase a lot if your previous IDR plan was based on your 2018 - 2020 income and your income increased (or if you got married)

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NEW from the Dep't of Ed:

March or prior recertification date?

• DON'T RECERTIFY! You'll but put into an administrative forbearance and stay on the same plan.
• If you recertified already and your payment went up, you'll be put back in your old plan.
• If you recertified already and your payment went down, you'll stay in your new plan.

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Should you switch to SAVE?

• What plan are you in now?
• If your current IDR plan is based on an older and lower income, it might make sense to wait until your repayment plan expires to switch.
• When you switch plans, you must certify income immediately.
• What's your debt-to-income ratio?
• PAYE and IBR have a "partial financial hardship" requirement. Essentially, your monthly payment can never be higher than the Standard 10-year repayment plan.
• The new SAVE plan has no monthly payment cap.
• Currently in IBR?
• You'll need to pay a one-time $5 payment and be in a one month forbearance (that doesn't qualify for PSLF) to switch out of IBR.
• Unpaid interest will capitalize when you leave IBR.
• If you're really close to PSLF... maybe just hold out. SAVE pros & cons webpage

Public Service Loan Forgiveness

PSLF basics

• 10-year forgiveness program requiring 120 qualifying payments made while working in qualifying public service employment.
• Employment can be cumulative, not consecutive.
• After 10 years, apply for tax-free total loan forgiveness.

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The four PSLF requirements

• Qualifying loans
• Qualifying repayment plan
• Qualifying employment
• Qualifying payments

Qualifying loans

• Only Direct federal student loans
• Private, refinanced, or institutional loans are not eligible
• Perkins or FFEL loans are not eligible unless consolidated into a Direct consolidation loan on studentaid.gov

Qualifying repayment plan

• All of the income-driven repayment plans qualify for PSLF.
• Standard 10-year plan isn't ideal but can sometimes qualify.
• Graduated, extended, or alternative plans do not qualify.

Qualifying employment

• 501(c)(3) nonprofit or government
• At least 30 hrs / week
• Employed = receive a W-2 (not an independent contractor)
• Your title or duties don't matter, and your job doesn't have to be law-related.
• No income cap!

Qualifying employment examples

• What always qualifies:
• Government at any level: federal, state, local, tribal, judicial clerkships
• All 501(c)(3) nonprofits
• Includes most colleges and universities (professors and clinicians count!)
• What rarely qualifies:
• Non-501(c)(3) nonprofits
• International employment
• What never qualifies:
• Unions
• Political campaigns or PACs
• Private firms or companies
• Independent consulting

Qualifying payments

• Need to make 120 qualifying payments, cumulatively
• Can only receive one credit per month (can't pay more to get PSLF faster)
• In the correct amount
• While enrolled in a qualifying repayment plan
• While employed 30+ hrs / week by a qualifying employer
• When a payment is due (i.e. in repayment status)
• Can't make progress while in school, during a grace period, or during most forbearances or deferments

Documenting employment

• To document your employment and count up qualifying payments, submit a PSLF Form to the Department of Education:
• Annually
• Each time you leave a job (including an end date)
• This is a retroactive process counting up payments already made.
• I.e., it's ok if you haven't submitted a form yet.
• Must be proactive! No one will ask you to submit.
• Once you submit your first PSLF Form, you'll be transferred to MOHELA.

Applying for PSLF

• You apply for PSLF once you've completed your 120 qualifying payments.
• You apply by submitting a final PSLF Form.
• Processing takes a few months.
• Must remain in qualifying employment until approved.
• Can enter a forbearance or elect to keep making payments.
• If you made more than 120 payments, you'll get an automatic refund from the Treasury.
• If you're eligible, your account balance drops to $0, and there are no tax consequences.

PSLF works!

• Roughly 800,000 borrowers have had their loans forgiven through PSLF and its associated programs so far, discharging over $56 billion in debt.
• Many Berkeley Law graduates have received total loan forgiveness through PSLF.
• However, it does take:
• Dedication to 10+ years of full-time qualifying public service employment.
• Ability to learn and follow the PSLF requirements.
• Frequent recordkeeping and check-ins to make sure you're progressing.
• Ability to navigate a dispute with your servicer if something goes wrong.

PSLF tips

• Read all communications from your loan servicer and the Dep't of Education
• Enroll in autopay
• Annually:
• Recertify your income on time to continue in IDR
• Submit a new PSLF Form to certify the past year of payments
• Download and save your payment history
• Track your months of qualifying payments rectify any discrepancies
• Document everything
• Advocate for yourself in the case of an error

Navigating MOHELA

Deadlines and timelines

IDR / PSLF account adjustment

• Temporary measure (like the 2021 - 2022 PSLF waiver) to expand the definition of a qualifying payment under IDR (20 - 25 year) and PSLF (10 year) forgiveness
• Months will count toward forgiveness regardless of the payment made, loan type, or repayment plan
• 12+ months of consecutive forbearance or 36+ months of cumulative forbearance will qualify for forgiveness
• Economic hardship & military deferments 2013 and onward will qualify
• Deferments before 2013 will qualify (except in-school)
• Repayment & qualifying forbearances and deferments before consolidation will qualify

Important dates

• April 30, 2024: deadline to consolidate loans for the IDR / PSLF account adjustment
• If you are in repayment and you have loans that aren't eligible for PSLF (Perkins or FFEL) or loans with different PSLF payment counts (think undergrad loans + law school loans), you must consolidate by 4/30/24 to benefit from the account adjustment.
• Spring & summer 2024: Dep't of Ed continues to implement the account adjustment.
• June 30, 2024: last day you can enroll in PAYE (20 year forgiveness) or ICR.
• SAVE and IBR will be the only remaining plans you can apply for or switch to.
• July 1, 2024: new SAVE regulations take effect (5-10% of discretionary income)
• 2024 - 2025: borrowers will need to recertify their IDR plans for the first time since March 2020

Consolidating your loans

• If you have Perkins or FFEL loans or loans with different numbers of qualifying payments toward PSLF, you can choose to consolidate them.
• Particularly useful if you had loans from undergrad, worked in qualifying employment, and then went to grad school–i.e., some loans are multiple years ahead of others
• If you consolidate prior to 4/30/24, your new consolidation loan will have the number of PSLF payments equal to the underlying loan closest to PSLF (like during the PSLF Waiver)
• If you consolidate after 4/30/24, your consolidation loan will have a weighted average number of PSLF payments
• Certify all periods of qualifying employment before consolidating

Consolidation continued

• Consolidating is not necessary if your loans are already Direct loans and roughly on the same track toward PSLF. Be cautious:
• Consolidation can increase your interest rate
• Consolidation will cause unpaid interest to capitalize
• Consolidation will require you to recertify your income immediately
• Again, consolidation is recommended for:
• People with FFEL or Perkins loans
• People with some loans much further along toward PSLF than others

Problems with your loans

What if your servicer gets it wrong?

• Easiest first steps
• Wait it out to see if the problem gets resolved during an audit or review
• Submit a new PSLF Form to force another look
• Next, escalate the issue with your servicer: talk to a supervisor or the servicer's ombudsperson
• Ask for an audit
• Ask for employee name and ID number
• Ask for follow up communications in writing

More outlets for complaints

• File a complaint with Federal Student Aid
• No response or insufficient response within 2 weeks? File a dispute with the Federal Student Aid Ombudsperson
• Email fsaombudsmanoffice@ed.gov
• Contact California’s Student Loan Ombudsperson, Celia Damian, at Celina.Damian@dfpi.ca.gov or file a complaint with the DFPI
• File a complaint with the Consumer Financial Protection Bureau
• File a consumer complaint with your state's Attorney General’s Office
• Contact a congressional representative

PSLF reconsideration

• Use Request for PSLF Reconsideration process if:
• The PSLF Form or Employer Search says your employer is ineligible but you know they are eligible
• You received communication from MOHELA saying your employer is ineligible but you know they are eligible
• You think your payment count is inaccurate and/or you were wrongly denied PSLF

Learn more

Upcoming Demystifying PSLF webinars

March 18: Alumni success panel

Berkeley Law alumni talk about their PSLF experience

April 1: student loan updates expert panel

Experts talk about recent and upcoming changes to student loans and potential legal hurdles

• Student Borrower Protection Center
• PSLF Coalition
• Consumer Financial Protection Bureau
• California Department of Financial Protection and Innovation
• Equal Justice Works
• AccessLex Institute

Outside resources

Email: lrap@law.berkeley.edu

Call: (510) 642-1563

Appointments: berkeleylawfinaid.as.me

Visit: 226 Law Building, across from the Reading Room

Website: law.berkeley.edu/admissions/jd/ financial-aid/loan-repayment- assistance-program