1. Are You Ready for Public Service Loan Forgiveness?
Eileen Eiden
Student Loan Supervisor
Austin Community College
Texas Association of Student Financial Aid Administrators

2. Agenda History and Intent of the program Overview of the program
How is your Financial Aid Office getting ready for it?
Future of PSLF
Texas Association of Student Financial Aid Administrators

3. History and Intent of the PSLF Program
Public Service Loan Forgiveness (PSLF) was signed into law July by President Bush
It is part of the College Cost Reduction Act (CCRA)
Intent of PSLF program from CCRA
“The Public Service Loan Forgiveness Program is intended to encourage individuals to enter and continue in full-time public service employment by forgiving the remaining balance of their Direct Loans after they satisfy the public service and loan payment requirements”
Texas Association of Student Financial Aid Administrators

4. Let’s go over PSLF
Texas Association of Student Financial Aid Administrators

5. Five Steps for Public Service Loan Forgiveness
1. Right Loan
2. Right Payment
3. Right Job
4. Repeat 120 times
5. Prove it

6. Right Loan ONLY DIRECT LOANS are ELIGIBLE for PSLF
As of July 1, 2010, all Federal student loans are Direct Loan
Prior to July 1, 2010, most loans were FFEL loans
How do I know if my Loans are Direct or FFEL???

7. NSLDS.ed.gov

8. Eligible Loans Direct Subsidized Loans Direct Unsubsidized Loans
Direct PLUS Loans (for parents and graduate or professional students)
Direct Consolidation Loans
Special Direct Consolidation Loans
Other federal loans eligible if consolidated into a Direct Consolidation Loan, including:
FFEL Subsidized/Unsubsidized Stafford Loans
FFEL PLUS Loans for parents and graduate or professional students
FFEL Consolidation Loans (excluding joint spousal consolidation loans)
Federal Perkins Loans
Title VII Health Professions and Nursing Loans

9. STUDENTLOANS.gov
To consolidate your loans, you can visit studentloans.gov.

10. Right Payments Income-Driven Repayment Plan
Old IBR – All loans
NEW IBR – New Borrower on or after 7/1/14
PAYE – Direct Loan (other rules)
REPAYE – Direct Loan Only
ICR – Direct Loan Only
Standard – All Loan but Not IDR Plan
Payments are based on your income and family size.
Loans will be forgiven in 20 or 25 years.
Old & New IBR and PAYE Plans require partial financial hardship (PFH).
No PFH for REPAYE and ICR
IDR Plan after 20 or 25 years canceled amount is taxable as income. PSLF is not taxable income.

11. Summary of Income – Drive Repayment Plans
Good example on discretionary income
Family of three income was 42,135 year, the 150% of Poverty Level is 30,135 – the borrower’s discretionary income is $12,000 year (different between 42,135 – 30,135) Divide the DI by 12 (months in a year) this will give you are month DI of $ Take the monthly DI by 15% or 10%... This will give you monthly payments.

12. Modeling PSLF - Billy Borrower
6/27/2018
Modeling PSLF - Billy Borrower
Is single with no dependents and lives in Georgia
Has an AGI of $35,000 that rises at 5% per year
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 12

13. Modeling PSLF Without PSLF With PSLF Time in Repayment Total Paid
14 yrs., 8 mos.
$76,339
ICR
18 yrs., 9 mos.
$91,713
IBR
20 years
$71,782
PAYE
25 years
$108,426
REPAYE
Time in Repayment
Total Paid
Total Forgiven $0 $0
$36,538 $0
With PSLF
10 years
$50,501
ICR
10 years
$36,927
IBR
10 years
$24,618
PAYE
10 years
$24,618
REPAYE
Time in Repayment
Total Paid
Total Forgiven
$22,459
$45,065
$55,333
$51,746

14. Taxation of Forgiveness - PSLF
ICR
Forgiven Amount = Income
Forgiven Amount = $22,459
Tax = $0
IBR
Forgiven Amount = $39,927
PAYE
Forgiven Amount = $55,333
REPAYE
Forgiven Amount = $51,746

15. Taxation of Forgiveness - IDR
ICR
Forgiven Amount = Income
Forgiven Amount = $0
Tax = $0
IBR
PAYE
Forgiven Amount = $36,538
Marginal Tax Bracket* = 28%
Tax* = $10,231
REPAYE
*Based on Billy’s year 20 income of $88,455, 2015 tax brackets, uncomplicated tax filer.

16. THE MAGIC NUMBER On-time Monthly Payments
Payments must have been made after 10/1/07
On-time (no later than 15 days after the scheduled due date
Must be mad each month
Must be made when the loan is not in default status
*Reduced and/or Zero dollar monthly payment under an IDR plan qua
On-time Monthly Payments

17. Payments Payments must have been made after 10/1/07
On-time (no later than 15 days after the scheduled due date)
Must be made each month
Must be made when the loan is not in default status
Reduced and/or Zero dollar monthly payment under an IDR plan qualify
Lump sum payments that exceed the scheduled payment amount do not count as separate payments

18. PSLF Qualifying Payments
As of last October…
Source: FedLoan Servicing

19. Right Job Yes to Tribal or Gov’t organizations, entities or agencies.
Government (Federal, State, & Local)
501 (c) (3) Non-profit
AmeriCorps Position
Peace Corps
Public Service Organization
Yes to Tribal or Gov’t organizations, entities or agencies.
No Government Contracts
Organization can’t be a labor union or partisan political organization
Time can’t be spent in religious instruction, worship services or any form of proselytizing
Full Time
# of hours the employer considers full- time
30 hours per week on average, whichever is higher
More than one qualifying part-time job simultaneously, may meet full-time employment requirement if work combined average of at least 30 hours per week with multiple employers

20. On time payments once a month for 10-years
Repeat 120 times
On time payments once a month for 10-years

21. Prove it
Fedloan Servicing
Myfedloan.org

22. Prove It Verify income & Family size annually
Certify your employment annually
Apply for forgiveness

23. Getting the word out!!! Start educating your staff
Encourage them to attend the FedLoan PSLF webinar
This webinar is offered monthly through the FedLoan website
Or check out American Student Assistance
ASA offers a PSLF webinar twice per month
Check out Last years FSA Conference on PSLF
Reach out to staff and Faculty at your institution by providing information
Identify who handles your employment certification at your institution
Start talking to your community leaders regarding this program
Texas Association of Student Financial Aid Administrators

24. What is the future for PSLF?
Still, borrowers shouldn’t panic about the Department’s argument that the ECF form isn’t a guarantee of forgiveness, said Isaac Bowers, the director of law school engagement and advocacy at Equal Justice Works, an organization that promotes public interest law. seems unlikely that the majority of borrowers who have submitted them — those who work for the government or for 501(c)3 nonprofits — will have their eligibility reneged, he said. Those types of jobs are clearly written into the statute governing the program, he noted. "
Texas Association of Student Financial Aid Administrators

25. Thank you! Eileen Eiden Student Loans Supervisor
Phone:
FedLoan Servicing Support Center
MyFedLoan.org/pslf
Toll-Free number: