Hi everyone! Welcome back to Melissa Making Cents!
As a college graduate, financial planner, and comprehensive college funding advisor, I know there are certain experiences from your college career that you will never forget. For some of us it’s wearing flip flops on the first day of class, getting caught in a rain downpour, and watching both your flip flops wash downstream as you step off the curb. For others it’s the first time in a dorm, first mid term, or the thrill of your first college football game (and singing fight songs or chanting the battle cry). One thing a graduate, or your financial advisor, will never forget is getting into student loan debt!
No matter if you cry “War Eagle”, “Hook ‘Em Horns”, “Gig ‘Em Aggies”, “Geaux Tigers”, “Boomer Sooner” or “Woo Pig Sooie”...
Grab your old comfy college sweatshirt and there is something we need to talk about - student loan forgiveness.
Last Week’s Blog Student Loan Forgiveness Programs: How to Qualify and When to Apply for Forgiveness gave an overview of the two types of student loan forgiveness programs - Public Service Loan Forgiveness and Federal Student Loan Forgiveness. Today we will go one step further and talk about the Temporary Expanded Public Service Loan Forgiveness program. This is an opportunity in which if you blink you might miss it!
Thankfully, there are College Funding and Student Loan Advisors...like me... that are available to help you create a plan to qualify for loan forgiveness!
There was, and still is, a ton of confusion about the Public Service Loan Forgiveness Program!
When Public Service Loan Forgiveness program was created in 2007, few had a clue how the program worked or how to advise borrowers. Loan servicers were directing people to be in the wrong type loans, wrong repayment methods, and often advising borrowers to consolidate incorrectly. Needless to say that the program at that point was a disaster, but the good news is it's greatly improving. Thankfully we now have clearer instructions on how to qualify and when to apply. But what about individuals that have been following the directions all along?
Temporary Expanded Public Service Loan Forgiveness Program was created to “slightly” expand the Public Service Loan Forgiveness Program
Whoa...that is a lot of forgiveness in one sentence!
The expansion was enacted to help calm the scandal of 99% of applicants being rejected for PSLF! The government, with the push of student-debt advocates like Sheldon Whitehouse and Tim Kaine, temporarily released $350 million to borrowers under the program, and expanded who qualifies for forgiveness under it. This expanded version allows forgiveness for people that were directed into the wrong payment plan. There is hope that it will be further expanded to the wrong loan types, but there is also a big push from others to shut down the entire set of programs. So right now, as financial planners we do the best that we can in helping borrowers to get qualified while the program exists in its current form.
Like the title of the program says... it's temporary! If you qualify under the program, get moving! This is a first come, first served opportunity to get a piece of the $350 million available for a limited time only!
How do you qualify for the Temporary Expanded Public Service Loan Forgiveness Program
According to the Department of Education’s Site:
“The Consolidated Appropriations Act, 2018 provided limited, additional conditions under which you may become eligible for loan forgiveness if some or all of the payments you made on your William D. Ford Federal Direct Loan (Direct Loan) Program loans were under a nonqualifying repayment plan for Public Service Loan Forgiveness (PSLF). The U.S. Department of Education (ED) is referring to this reconsideration as the Temporary Expanded Public Service Loan Forgiveness (TEPSLF) opportunity.
If you believe you qualify for the TEPSLF opportunity, it’s important to read the information on this page and send ED your TEPSLF request email as soon as possible. This opportunity is temporary, has limited funding, and must be provided on a first come, first served basis. Once all of the funds are used, the TEPSLF opportunity will end.”
If you remember from last week’s blog post Student Loan Forgiveness Programs: How to Qualify and When to Apply for Forgiveness, the PSLF program requires you to be on one of the income driven repayment plans:
- IBR - Income Based Repayment
- ICR - Income Contingent Repayment
- PAYE - Pay as You Earn
- REPAYE - Revised Pay as You Earn
As straightforward as it sounds, lots of student loan borrowers were directed by loan servicers to other types of repayment plans that were not and still are not eligible for Public Service Loan Forgiveness. This includes:
- Consolidated Standard Repayment
- Consolidated Graduated Repayment
- Extended Repayment
- Graduated Repayment
The TEPSLF program is extended to those borrowers, AS LONG AS THEY MEET ALL THE OTHER REQUIREMENTS
Only William D. Ford Federal Direct Loan Program (Direct Loans) qualify
As of right now, the only loan programs that qualify are the Direct Loans. This means that anyone with Parent PLUS loans, Federal Family Education Loans (FFEL), Perkins Loans, and private loans are not eligible. My hope is that this is also expanded soon, because I personally know a lot of individuals that were directed into FFEL loans.
Loans that are in default also do not qualify!
Thankfully there are college funding and student loan advisors like myself who are ready to help. If you need help navigating the problem contact me and I would be happy to help guide you!
The process for TEPSLF sounds as disheartening as the PSLF program
If you thought any type of loan forgiveness would be easy… you are grossly mistaken. For the Public Service Loan Forgiveness program the entire process takes 10 years of work. It also requires lots and lots of documentation and organization. You can expect the Temporary Expanded Public Service Loan Forgiveness program to be even more challenging.
The TEPSLF Process:
- You must submit a PSLF application for forgiveness and have that application denied (even if you already know you’ll be denied, you have to do this anyway).
- The denial has to be because some of your payments were not made under a qualifying PSLF repayment plan (and not for any other reason).
- You have to have 10 years of certified qualifying employment.
- Your recent payments have to have been at least as much as they’d have been in a qualifying PSLF repayment plan.
- You have to have made 120 payments that qualify (some qualification criteria include: they need to have been made after October 1, 2007, to not have been more than 15 days late, and to have been made while employed by a qualifying employer). If your loans were in a grace period, deferment, or forbearance when you made a payment, it won’t qualify. Also, the payments need to have been made on the loan(s) you’re seeking forgiveness on. If you consolidated halfway through the 10 years, then the payments you made on the unconsolidated loans won’t count..
- Then you apply for TEPSLF!
Being organized in this process can save you a lot of heartaches and headaches. Grab a binder and start putting your loan information together. Know when your loans began, and what payment method you were following. If you have any notes from servicers, put them in your binder too. You can use your notes to help your case.
Double check that your employer/employers have been certified. You will need an Employer Certification Form for each employer. It’s wise to have a form done each year, because if an employer closes it could be hard to get the certification. Stick them in your binder along with the record of qualifying payments for the year.
- The government (including military, law enforcement, schools, and universities)
- Tax-exempt not-for-profit 501(c)(3) companies including tax-exempt hospitals, tax-exempt charitable organizations, tax-exempt educational institutions, etc. (It’s important to note that if you’re a member of clergy or your work is religious in nature, you may not receive exemption. To qualify you must spend at least 30 hours per week on work that doesn’t have to do with proselytizing, conducting worship services, or providing religious instruction.)
- Peace Corps or AmeriCorps
- Other non-profit organizations that provide one of the following services:
- Emergency management
- Military service
- Public safety
- Law enforcement
- Public interest law services
- Early childhood education (including licensed or regulated healthcare, Head Start, and state-funded prekindergarten)
- Public service for individuals with disabilities and the elderly
- Public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in healthcare practitioner occupations and healthcare support occupations, as such terms are defined by the Bureau of Labor Statistics)
- Public education
- Public library services
- School library or other school-based services
Be content with being rejected for Public Service Loan Forgiveness program
After you have all your info organized, it’s time to apply for forgiveness. You will also need to wait to be denied for the Public Service Loan Forgiveness program. It’s OK to get rejected here because you will be applying for the Temporary Expanded Public Service Loan forgiveness program in its place, as long as you are getting rejected for being in the wrong repayment plan for all or part of your 120 payments. (Hopefully this changes later) In fact, when you get the rejection, I challenge you to post a video of you giving your best impersonation of Jim Carey from Dumb and Dumber…. “So you are telling me there’s still a chance”!
The Department of Education uses email... successfully!
I was a little shocked to find out that the Department of Education uses email instead of an archaic form! Surprisingly they are tech savvy!
Throw on your old college sweatshirt and follow these steps!
- Email TEPSLF@myfedloan.org
- Subject line: “TEPSLF Request.”
- In the body of the email, use the sentence, “I request that the Education Department reconsider my eligibility for Public Service Loan Forgiveness.”
- Include the same name under which you submitted that PSLF request that got denied (if you’ve married, divorced, or changed your name for another reason in the meantime, include the old name in the email).
- Also include your date of birth in MM/DD/YYYY format.
Done! Now you document your email and play the waiting game. The process can now take between 60-120 days for you to get a response. Be proactive! Reach out to them and ask for confirmation of the email application. FedLoan Servicing is required to confirm that you are eligible and give you a determination.
Keep reaching out and documenting everything. They may request more information from you to help determine if you were paying at least as much as you would have on an income based repayment plan. Whatever they want, give it to them and the sooner the better. You will need to provide it in 21 days or your application will be CANCELLED.
If you are denied, you will be given a reason as well as an explanation of your next steps. You can also follow up with more information you gathered and file an appeal. Don’t give up at this point! Follow the instructions, and give it another good college try.
If you are approved, celebrate your hard work! When you log in to your account you should see a $0! Your loans, and any outstanding interest are forgiven tax free.
Temporary Expanded Public Service Loan Forgiveness Program is not a MYTH!
The news and stats on the programs haven't been as good as they could be, but more and more people are finding success. If you google TEPSLF Success, you will see a number of people that have had success. Tides are turning, as people are figuring out the process. Get the process started ASAP if you think you will apply. The T stands for Temporary, and when the money runs out the opportunity is gone!
As a financial planner and College Funding and Student Loan Advisor, I work with families to create college funding plans that minimize the impact of student loan debt. If you or someone you know needs help navigating the student loan system, call or click here to setup a no cost consultation!
Until next time…… This is Melissa Making Cents!
Melissa Anne Cox
CERTIFIED FINANCIAL PLANNER™ is also a College Planning ans Student Loan Advisor in Dallas, Texas.