Understanding Pslf: Loan Pause And Its Implications

The COVID-19 pandemic saw the US government pause payments on most federal student loans. This payment pause has been extended multiple times by both the Trump and Biden administrations, and as of March 2024, it is still in effect. This pause has led to questions about whether the paused months count towards the Public Service Loan Forgiveness (PSLF) program. The answer is yes, the months spent in the payment pause will count towards PSLF forgiveness, but only if the borrower takes steps to ensure they are otherwise eligible for PSLF. Additionally, the Department of Education has created a program called PSLF Buy Back to allow borrowers to make up for missed payments due to forbearance.

The loan pause will count towards PSLF for those with Direct Loans

The COVID-19 pandemic has had a significant impact on student loan borrowers, with the federal government enacting a payment pause on most federal student loans. This pause, which began in March 2020, has provided much-needed relief to borrowers by suspending payments and waiving interest charges. As a result, many borrowers have had their loan balances reduced or eliminated.

While the payment pause has been a welcome reprieve for borrowers, a critical question arises: does this period count towards Public Service Loan Forgiveness (PSLF)? The answer is yes, but with certain conditions. For borrowers with Direct Loans, the months spent in the COVID-19 payment pause will count towards PSLF. This means that even without making payments, borrowers with Direct Loans can accumulate months of credit towards the 120 months required for PSLF.

However, it is important to note that this benefit is specifically for those with Direct Loans. For borrowers with non-Direct loans, such as those with private lenders, the situation is different. Private lenders are not obliged to offer forbearance or deferment, and even if they do, interest may continue to accrue. To have their forbearance or deferment months count towards PSLF, borrowers with non-Direct loans may need to consolidate their loans by a specific deadline.

Additionally, it is worth mentioning that the impact of the payment pause on PSLF eligibility goes beyond the accumulation of credit. The pause has also affected borrowers' employment situations, as they may have transitioned to part-time work or left their jobs altogether. To qualify for PSLF, borrowers must meet specific employment requirements, such as working full-time for a qualifying employer. Therefore, borrowers should carefully review the employment requirements and ensure they are on track to meet them during the payment pause period.

In conclusion, while the COVID-19 payment pause has provided financial relief to student loan borrowers, it is important for those seeking PSLF to understand the nuances of how this period will be counted towards their forgiveness. For borrowers with Direct Loans, the pause counts towards PSLF, but for those with non-Direct loans, further steps may be necessary to ensure their eligibility. As the pandemic continues to evolve, borrowers should stay informed about any changes to student loan policies and their potential impact on their loan repayment journey.

The COVID forbearance period counts as a qualifying payment for PSLF

The COVID-19 pandemic has had a significant impact on the financial situation of many student loan borrowers, leading to the implementation of various relief measures. One notable aspect of this relief has been the automatic forbearance or pause on federal student loan payments, which was initially enacted by Congress under the CARES Act during the Trump administration. This payment pause has been extended multiple times by both the Trump and Biden administrations, providing much-needed financial relief to borrowers.

During the COVID-19 payment pause, borrowers were not obligated to make any loan payments, and no interest was charged on covered loans. This meant that borrowers' student loan balances remained unchanged during this period. While the payment pause provided temporary financial relief, a critical question emerged: would this forbearance period count towards the Public Service Loan Forgiveness (PSLF) program?

The answer is yes; the COVID forbearance period does count as a qualifying payment for PSLF. This means that the months spent in the payment pause will be considered as part of the 120 payments required for loan forgiveness under the PSLF program. This is good news for borrowers who were concerned about the impact of the payment pause on their progress towards loan forgiveness. However, it's important to note that borrowers still need to ensure they meet the other eligibility requirements for PSLF, such as having Direct loans and fulfilling the employment criteria.

To take advantage of this forbearance period counting towards PSLF, borrowers can follow a few crucial steps. Firstly, borrowers should ensure they have Direct loans and meet the employment requirements of the program. Secondly, they can generate the PSLF form via an online help tool and get it signed. Additionally, borrowers can submit an Employment Certification Form (ECF) to prove their eligible employment status. Finally, they can complete the form requesting "Public Service Loan Forgiveness (PSLF) Reconsideration" by following the detailed instructions provided by the Department of Education.

While the COVID forbearance period counts towards PSLF, it's worth noting that the treatment of forbearance periods can vary depending on the specific circumstances. For example, the SAVE plan litigation forbearance does not automatically count towards PSLF, and borrowers may need to explore options like the PSLF Buyback Program to include those months. Additionally, months spent in school deferment, even with full-time employment and payments, do not count towards PSLF. Therefore, borrowers should carefully review the specific conditions and requirements associated with their loan programs to maximize their benefits.

The Education Department is providing retroactive credit for time in forbearance

The PSLF program allows borrowers to receive credit towards their student loan forgiveness terms for the time spent in forbearance. This is applicable to those who have reached the required number of months of qualified employment in a public service field. The Education Department's IDR Account Adjustment initiative further amplifies these benefits, allowing credit for past loan periods even if borrowers were not in an IDR plan. This includes "any months in a repayment status, regardless of the payments made, loan type, or repayment plan," as well as some periods of deferment and forbearance.

It's important to note that the SAVE Plan forbearance, which was previously known as REPAYE, does not automatically count towards PSLF or IDR credit. However, borrowers in this situation can still receive PSLF credit through the PSLF Buy Back program. This program enables borrowers to submit a request to make payments for the missed months due to forbearance once they have completed 120 months of qualified employment.

The Education Department's initiatives provide relief to borrowers by effectively shortening their remaining repayment period before reaching the loan forgiveness threshold. The longer the loan pause remains in effect, the more borrowers may benefit from loan forgiveness. These measures demonstrate the Department's efforts to assist borrowers in managing their student loan obligations.

The PSLF Buyback Program allows missed payments to be made at a later date

The Public Service Loan Forgiveness (PSLF) program is a US federal program that forgives the remaining balance on Direct Loans after borrowers have made 120 qualifying monthly payments while working full-time for a qualifying employer.

The PSLF Buyback Program allows borrowers to make up missed payments at a later date. This program is designed for borrowers who were unable to make their monthly payments due to a period of deferment or forbearance. To be eligible, borrowers must have 120 months of qualifying employment in a qualifying public service job and have an outstanding student loan balance remaining.

The PSLF Buyback Program is particularly relevant to borrowers whose payments were affected by the COVID-19 pandemic or the Saving on a Valuable Education (SAVE) plan litigation. While the COVID-19 forbearance period counts towards the 120-month requirement for PSLF, the SAVE plan litigation does not. Therefore, the PSLF Buyback Program provides an opportunity for borrowers to make up these missed payments and get closer to loan forgiveness.

It is important to note that borrowers can only buy back months when they were in an ineligible deferment or forbearance status but were otherwise eligible for PSLF. The buyback payments are calculated based on the lowest income-driven repayment monthly payment during the deferment or forbearance period. If borrowers were eligible for a zero monthly payment during this period, no payments will be required under the PSLF Buyback Program.

Additionally, only months in the Direct Loan program can be bought back, and borrowers must have been in a repayment status during the months to be bought back. It is recommended to wait for the payment count adjustment before applying for the PSLF Buyback Program, as this may reduce the number of payments remaining before qualifying for forgiveness.

The IDR Account Adjustment will allow borrowers to credit past loan periods

The IDR Account Adjustment, also known as the IDR waiver, is a program initiated by the Biden administration that allows borrowers to credit past loan periods towards their IDR student loan forgiveness terms. This includes "any months in which you had time in a repayment status, regardless of the payments made, loan type, or repayment plan," as well as some past periods of deferment and forbearance.

The IDR waiver is a significant development for student loan borrowers, as it provides the opportunity for any time spent in repayment and many periods of forbearance or deferment to count towards the 10-year Public Service Loan Forgiveness (PSLF) and 20- or 25-year IDR forgiveness programs. This means that borrowers who have been repaying their student loans for extended periods may now be closer to loan forgiveness.

It's important to note that the IDR waiver has a specific consolidation deadline of June 30, 2024, for borrowers to qualify for these benefits. Those who missed this deadline can still receive credit for past IDR payments but must enroll in an eligible IDR plan to continue progressing toward forgiveness. The IDR tracker, launched by the Education Department in January 2025, provides borrowers with a clear picture of their loan forgiveness progress and helps them make informed decisions about their repayment plans.

The IDR Account Adjustment is separate from the PSLF Buyback Program, which addresses the forbearance enacted due to the SAVE plan litigation. Unlike the COVID-19 forbearance, the SAVE plan forbearance does not automatically count towards PSLF. However, borrowers can submit a request to make payments for the missed months due to the forbearance once they reach 120 months of qualified employment in a public service field.

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