How to Avoid the Biggest PSLF Errors That Cause Refusal of Forgiveness


    pslf error

    If you are among the 62% of college students who graduate with some form of student loan debt, you are likely investigating the many different repayment options available. A popular repayment option is Public Service Loan Forgiveness (PSLF).

    PSLF was introduced in October 2007. It allows borrowers who make 10 years of qualifying payments (120 total payments) and who work for a government employer to completely waive their loans.

    The first eligible borrowers for PSLF would have completed their 10-year payment in October 2017. However, the latest statistics from the Department of Education dated April 2021 show that only 5.5% of PSLF applicants have been approved. In this article, we’re going to look at the biggest PSLF errors that lead to rejections and how to avoid them.

    If you’ve been rejected by PSLF and are looking for the best payback strategy, you should check out Chipper. Chipper is a service that can help you analyze the various repayment and loan waiver options and determine which one might be right for you.

    What is Public Service Lending (PSLF)?

    As mentioned earlier, Public Service Loan Forgiveness is a program that was first introduced in 2007. It allows graduates who make 120 qualified payments and work for a qualified employer to completely waive their loans.

    The Public Service Loan Forgiveness program is only an option for borrowers who have direct loans or who combine other federal loans into one direct loan. You must also have an income-based repayment plan such as Pay-As-You-Earn (PAYE), Revised Pay-As-You-Earn (REPAYE), Income Based Repayment (ICR), or Income Based Repayment (IBR).

    If you made non-qualifying repayment payments while working for a qualified employer, you may be eligible for a Temporary Extended Forgiveness Public Service Loan Application (TEPSLF). Of the 5.5% of applicants approved for PSLF forgiveness in April 2021, 3.4% qualified through TEPSLF.

    How to qualify for PSLF

    Even though the nature of your loan and your repayment schedule make you eligible for PSLF, you must also work for a qualified employer. The following types of jobs and employers qualify for public service loans:

    • Government organizations at any level (U.S., state, local, or tribal organizations)
    • Nonprofits that are tax exempt under Section 501 (c) (3)
    • Nonprofits that are NOT exempt from tax under Section 501 (c) (3) but provide certain types of qualified public services.
    • The Peace Corps
    • AmeriCorps

    See also: Which jobs and employers qualify for PSLF?

    It is important to understand that it is your actual employer whose profession is relevant for qualification under the PSLF. For example, if you are a government contractor, this is not the same as being employed by a government organization.

    Biggest PSLF Mistakes That Lead to Loan Denial

    The U.S. Department of Education has identified eight common PSFL mistakes that can lead to rejection. Here is the list:

    • If you don’t submit your Employment Certificate Form (ECF) every year
    • Making mistakes with the ECF
    • Don’t consolidate your ineligible loans
    • Not participating in an income-based repayment plan (IDR)
    • Miss your annual IDR recertification deadline
    • Hold for respite or forbearance
    • Missing payments
    • Make additional payments

    The best way to avoid these PSLF errors that lead to a rejection is to remember to fill out your Employment Certificate (ECF) form every year. Instead of making payments for 10 years only to find out that you are not eligible for PSLF, filling out your ECF each year is a way to ensure that any kinks are cleared up in advance.

    How to avoid these PSLF errors

    Completing the ECF isn’t the only step you can take to avoid the PSLF problem. Here are some more suggestions on how to avoid PSLF errors.

    • Make sure your ECF is not missing any information. The Department of Education mentions that two of the most common pieces of information missing are the address of the employer and the employer identification number (EIN).
    • Keep your information consistent every year. ED specifically mentions that they often see inconsistent employment start dates. If you have any type of loan other than a direct loan, you will need to consolidate your loans before applying for PSLF.
    • Consolidate Ineligible Loans. If you have Parent PLUS, FFEL or Perkins loans, you will need to group them together into a direct consolidation loan before applying.
    • Join an income-oriented amortization plan. If you are currently on the Standard, Graduated, or Extended repayment plan, consider switching to an IDR plan to maximize your forgiveness potential.
    • Give up your procrastination. If you work for a qualified employer during your studies, you may want to contact your servicer to release your respite so you can begin your 120 month qualifying payments as soon as possible.
    • Don’t make late payments. Of course, you should generally not make any late payments. However, this is especially important if you are tracking PSLF as payments made more than 15 days late are not considered qualifying payments.

    Most of these ways to avoid PSLF errors can be aptly summarized as follows: “Look at all of the mistakes we just mentioned. Now don’t do any of them! “

    Final thoughts

    If you still have questions about whether PSLF is right for your specific situation, take a look at Chipper and let him help you analyze the various repayment and loan waiver options to determine which one might be right for you.


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