How does COVID-19 student loan relief affect Public Service Loan Forgiveness?

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If you’re on track for Public Service Loan Forgiveness, you may think that the current COVID-19 crisis has disrupted your progress, since federal loan payments are not required. However, as long as you still work full time for a qualifying employer, you can qualify and make progress – even if you’re not making payments.

PSLF is included in current administrative forbearance

Currently, most federally owned student loans are in administrative forbearance through Aug. 31, 2022 — meaning payments are not required, interest rates are set at 0 percent and collections activities are halted. This forbearance period automatically went into effect for federal student loans on March 20, 2020.

Public Service Loan Forgiveness requires borrowers to make 120 payments in order to be eligible. However, the government has made concessions for borrowers benefiting from the payment pause. If you are not making payments on your student loans but you work full time for a qualifying employer, you’ll still receive credit for PSLF or Temporary Expanded PSLF as if you made the payments — in other words, they’re counted as payments of $0.

To make sure that these credits take place, you’ll need to submit a PSLF form that certifies your employment for the same period as the federal student loan suspension. If you reached your 120 qualifying payments during the suspension period, you can still apply for PSLF.

That said, if you’ve lost your job with a qualifying employer or you work fewer than 30 hours at an eligible employer, this time won’t count toward PSLF. You don’t lose your PSLF eligibility entirely, but it might take longer to qualify for forgiveness.

Through Oct. 31, 2022, you may also see additional benefits if you consolidate previously ineligible loans. The Biden administration has introduced a temporary PSLF waiver that allows payments on FFEL loans and Perkins Loans to count toward PSLF, as long as they are consolidated — so if you’ve held ineligible loans during the payment pause, applying for the waiver will allow you to get credit for those payment periods.

Should you stop making payments if you’re pursuing PSLF?

While continuing to make payments on your student loans during administrative forbearance can help you pay them off faster, it may not be the best move if you’re pursuing PSLF. Since you’ll get credit for that time whether you make those payments or not, you may as well keep that money in your pocket, since continuing to make payments will only reduce the amount that gets forgiven.

Instead, you might want to use that money for other pressing needs, like paying off debt, staying current on home payments, keeping the lights on or paying for food. The point of the student loan payment suspension is to keep you from having to decide between student loan payments and basic survival. If you have the cash and need a place to put it, consider putting money into an emergency fund or paying off private loans that don’t qualify for PSLF.

How to stay on track for PSLF

If you’re taking advantage of the suspended federal student loan payments, you’ll need to complete a PSLF form that certifies your employment during the suspended time period. You’ll see your qualifying payments updated when you complete your employment certifications.

If you’ve lost your job or you’re facing reduced hours because of the COVID-19 crisis, you’re probably facing a PSLF setback right now, since you’ll still need to meet basic PSLF criteria in order for your suspended payments to count. However, having your hours cut during this time doesn’t mean you’ll lose your progress — as soon as you meet the requirements again, your qualifying payments will pick back up where they left off.

Take note that grace period, in-school and some deferment, forbearance and bankruptcy statuses still aren’t eligible for Public Service Loan Forgiveness during the period of administrative forbearance.

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