Student loan borrowers who’d hoped to qualify for Public Service Loan Forgiveness but were denied because they were in the wrong repayment plan have another shot at forgiveness.
But they need to act quickly — a $350 million pool of money earmarked by Congress will be distributed on a “first-come, first-served” basis.
Luckily, all that borrowers who were previously denied Public Service Loan Forgiveness have to do to get the ball rolling for a second chance at forgiveness is send an email that takes only a few seconds to write.
Congress approved $350 million in relief in March for student loan borrowers who made the equivalent of 10 years of loan payments while working for the government or a qualifying nonprofit, only to be denied forgiveness because they were tripped up by the program’s complex requirements.
Qualifying repayment plans
To qualify for Public Service Loan Forgiveness (PSLF), most borrowers will not only have to be working for the government or a qualified nonprofit, but also be enrolled in one of the government’s income-driven repayment plans, such as PAYE, REPAYE, IBR or ICR.
But under the Temporary Expanded PSLF (TEPSLF) program, borrowers who made 120 qualifying payments under an expanded list of qualifying repayment plans may be granted loan forgiveness.
The expanded list of qualifying repayment plans includes the Graduated Repayment Plan, Extended Repayment Plan, Consolidated Standard Repayment Plan, and Consolidated Graduated Repayment Plan.
How to write that TEPSLF email
Congress stipulated that the $350 million earmarked for the TEPSLF program be distributed on a first-come, first-served basis. But until this week, there was no way to apply for it, despite pressure from lawmakers on Secretary of Education Betsy DeVos to get the ball rolling.
Now, the Department of Education has created a new web page that provides details on how borrowers who were denied Public Service Loan Forgiveness can apply for reconsideration.
The first step for borrowers who think they may qualify for relief is to send their name and date of birth to FedLoan Servicing, the company that manages the PSLF program for the government.
Here’s how the Department of Education suggests the email should look:
Subject: TEPSLF request
I request that ED reconsider my eligibility for public service loan forgiveness.
Name: [Enter the same name under which you submitted your PSLF application]
Date of Birth: [Enter your date of birth in MM/DD/YYYY format]
What happens next?
After you send your request for reconsideration, FedLoan Servicing will check to see if you’d previously applied for Public Service Loan Forgiveness and been denied.
Don’t expect to hear back right away, but you should eventually receive one of the following three email responses in return, informing you:
- You are being considered for TEPSLF because you applied for PSLF and had your application denied. FedLoan Servicing will contact you again once the review is complete or if they need additional information.
- You have a PSLF application under review and if you are not determined to be eligible for loan forgiveness under the PSLF Program, your eligibility for the TEPSLF opportunity will be evaluated automatically because you have already sent your email request for reconsideration. FedLoan Servicing will contact you again once the review is complete or if they need additional information.
- You are not eligible for TEPSLF at this time because you have not applied for PSLF and had your application denied.
If you can’t email FedLoan Servicing, or you have questions, you can call 1-855-265-4038 from 8 a.m. to 9 p.m. Eastern time, Monday through Friday.
More than 26,000 public servants could get relief
How many borrowers might be able to claim TEPSLF? According to a 2016 GAO report, the median loan balance of borrowers granted preliminary certification for PSLF in 2015 was $60,000. So after 10 years of payments, they’d qualify for about $13,000 in loan forgiveness.
Source: “Education Needs to Improve Its Income-Driven Repayment Plan Budget Estimates,” U.S. Government Accountability Office, November, 2016.
So if TEPSLF provides an average of $13,000 in loan forgiveness, the additional $350 million appropriated by Congress could help more than 26,000 borrowers.
That’s just a drop in the bucket, though, considering the number of borrowers who may qualify for Public Service Loan Forgiveness. According to the GAO, the Department of Education assumes that 29 percent of college graduates and 31 percent of borrowers with graduate degrees could be eligible (only 21 percent of student loan borrowers who did not complete their degree are expected to be eligible).
That’s the basis for Credible’s estimate that, among the 24.9 million borrowers already paying back $865 billion in federal student loans, between 5.2 million and 7.7 million may eventually qualify for public service loan forgiveness.
As of Dec. 31, 2017, only 802,040 federal student loan borrowers had been granted preliminary certification that they are working in jobs and enrolled in repayment plans that qualify them for Public Service Loan Forgiveness.
If you don’t have a job in public service, you may still qualify for loan forgiveness in one of the government’s income-driven repayment programs. But takes longer to qualify for loan forgiveness if you’re not a public servant — 20 to 25 years — and any amount that’s forgiven is considered taxable income. For many borrowers, stretching out payments over such a long period of time without an interest rate reduction can dramatically increase the total cost of paying off their loans.