Download ppt - Barbara Hoblitzell, Ian Foss, and Dan Weigle | Dec. 2015 U.S. Department of Education 2015 FSA Training Conference for Financial Aid Professionals Public

Barbara Hoblitzell, Ian Foss, and Dan Weigle | Dec. 2015

U.S. Department of Education

2015 FSA Training Conference for Financial Aid Professionals

Public Service Loan Forgiveness

Session 5

PSLF Basics

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120 Qualifying Payments In Qualifying Repayment Plans …When Applying For & Receiving PSLF

On Direct Loans While Working For A Qualifying Employer…

Per IRS, forgiven amount is not taxable income

PSLF Eligible Loans

Federal Direct Student Loan

PSLF is only for Direct Loans, but all Direct Loans qualify

Parent PLUS Loans - NO

Perkins Loans - NO

FFELP Loans - NO

Direct Consolidation Loan - YES

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PSLF Qualifying Employment

501(c)(3) not-for-profit organization Other not-for-profit organizations providing specific qualifying services

Any government organization

It matters where you work, not what you do…

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PSLF Full-Time Employment• Full-time is the greater of:

• Employer’s definition of full-time• 30 hours per week

• May work multiple qualifying part-time jobs that equal full-time

• For borrowers at a non-profit organization, hours spent in religious instruction, worship services, or proselytizing do not count

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PSLF Qualifying Repayment Plans

• 10-Year Standard• IBR• ICR• Pay As You Earn• REPAYE• Others ≥ 10 Year Standard• Income-driven plans are most likely to

yield a balance for forgiveness

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PSLF Qualifying Payments

120 separate monthly payments*

After October 1, 2007

Do not need to be consecutive

Must be for full amount due under plan

Must be made within 15 days of due date

*Exception for AmeriCorps, Peace Corp, and DOD

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PSLF Payment Amount• Multiple partial payments

• Count as one payment• All must be received within 15 days of due date

• Payments made when not required• Do not qualify

• Lump sum payments• Count as one payment• Exceptions for AmeriCorps, Peace Corp, and Department of

Defense borrowers

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• Billy Borrower:• Is single with no dependents and lives in Georgia• Has an AGI of $35,000 that rises at 5% per year and • Has $50,000 in Direct Loan debt ($23,000 of which is

subsidized), all of which has a 6% interest rate• Borrowed for graduate school

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Modeling PSLF - Billy Borrower

Modeling PSLF

10 years

$50,501

ICR

$22,459

10 years

$36,927

IBR

$45,065

10 years

$24,618

PAYE

$55,333

Time in Repayment

Total Paid

Total Forgiven

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14 yrs., 8 mos.

$76,339

ICR

$0

18 yrs., 9 mos.

$91,713

IBR

$0

20 years

$71,782

PAYE

$36,538

Time in Repayment

Total Paid

Total Forgiven

Without PSLF

With PSLF

10 years

$24,618

25 years

$108,426

REPAYE

REPAYE

$0

$51,746

Taxation of Forgiveness - IDR

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*Based on Billy’s year 20 income of $88,455, 2015 tax brackets, uncomplicated tax filer.

Taxation of Forgiveness - PSLF

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PSLF Employment Certification

FedLoan

Servicing

determines borrower has direct loans

Borrowers who want confirmation that employment and payments qualify should submit the Employment Certification Form to FedLoan Servicing

FedLoan

Servicing

determines employment

qualifies

All federally-held loans transfer to FedLoan

Servicing

FedLoan determines qualifying payments were made

during employed

period

FedLoan determines qualifying payments were made

during employed

period

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PSLF Employment Certification Form

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PSLF ECF

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PSLF ECF

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PSLF ECF

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PSLF ECF

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Common ECF Issues

Inaccurate or Missing End Date on ECF Form Blank end date when the borrower is still employed vs. checking “still employed”Check Box 15 to certify accuracyMissing required fields (such as EIN number)

Payment Tracking Must submit an ECF for an updated qualifying payment countPayments made to other servicers (not just FedLoan) can be counted toward PSLF

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Eligible Loan Types

Employer Eligibility

All Federal loans can be eligible through Direct Loan Consolidation.

Consolidation and PSLF

Appropriate Time to Begin Tracking for PSLF

Qualifying Payment Plans

Common Program Misconceptions

Qualifying employment for the PSLF Program is not about the specific job a borrower does, but rather, who the employer is.

Qualifying repayment plans include all income-driven repayment plans and the 10-year Standard Repayment Plan.

Consolidating Direct Loans will erase any qualifying payments made.

Borrowers shouldn’t wait to submit an ECF until after they have made 10 years of qualifying payments.

PSLF PortfolioNumber of borrowers submitting ECF

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2015Source: FedLoan Servicing

PSLF PortfolioNumber of borrowers with DL & Qualifying Employment

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2015Source: FedLoan Servicing

PSLF Qualifying Employment

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Source: FedLoan Servicing23

62%

0%

38%0%

0%

Government

501(c)(3)

AmeriCorps

Peace Corps

Other non-profit

Approved ECFs by Employer Type

PSLF Processed ECF’s

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564,325 Processed

Source: FedLoan Servicing

392,571 (70%) Approved

171,754 (30%) Denied

PSLF Processed ECF’s

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Denial Reasons


Missing/Incorrect Information

Employer Not Qualified

No Eligible Loans

44%

16%

40%

PSLF Qualifying Payments

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PSLF Qualifying Repayment Plans

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PSLF PortfolioAmount borrowed by borrowers who had employment and loans certified for PSLF

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PSLF PortfolioAnnual adjusted gross income of borrowers who had employment and loans certified for PSLF

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PSLF School Resources

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• Borrower Toolkits for outreach to student borrowers at MyFedLoan.org/schools

• Reporting Available– Customized e-mail communications showing

the number of borrowers for your institution who have submitted an Employment Certification Form

– Student detail information through the FedLoan Servicing School Portal

• Training resources and personalized support at MyFedLoan.org/training

– Presentation available for download– Sector-based, personalized support

QUESTIONS?

Visit StudentAid.gov/publicservice

for more information about PSLF.

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