Changes in Public Service Loan Forgiveness program favor the borrower

Clergy and other church leaders are now able to get more forgiveness earlier

by Paul Seebeck | Presbyterian News Service

LOUISVILLE — The message from Monday’s Student Loan Debt Webinar describing recent changes in the Public Service Loan Forgiveness program (PSLF) is overwhelmingly in favor of the borrower — and potentially beneficial to ministers and other church leaders.

Kevin Porath, vice president of operations for People Joy, which specializes in student loan debt and student debt forgiveness, told nearly 70 people attending the Presbyterian Mission Agency’s Financial Aid for Service webinar the changes — which expire on Oct. 31 — allow more borrowers to get more forgiveness earlier.

“Just last week a person we were helping who came to us from FAFS got loan forgiveness,” he said. “It was a lot of money” — around $25,000, Porath said.

People Joy works in partnership with the Presbyterian Church (U.S.A.), including the mission agency.

After being excluded for over a decade, proselytizing is now being allowed for public service loan forgiveness consideration. This means clergy and others engaged in religious-oriented work may now qualify for loan forgiveness in public service work, with payment made on a direct federal student loan.

Direct Loans (subsidized or unsubsidized), Direct Plus Loans, and Direct Consolidation Loans are available for PSLF.

Other federal student loans, like the Family Federal Education Loan (FFEL), Perkins, and Loans for Disadvantaged Students are also eligible for PSLF but must first be consolidated into a Direct Consolidation Loan.

“I’m sure that is a scary proposition, because for years and years you were told that if you consolidated your debt, it would reset the clock for PSLF,” Porath said. “But that is no longer the case.”

Once those loans are consolidated, a PSLF Employment Certification Form (ECF) must be submitted by Oct. 31. The form certifies that the applicant has worked full-time for a qualifying employer during the period the applicant held FFEL or Perkins loans.

Payments made under non-income driven repayment plans will also receive PSLF credit, including standard, graduated and extended, as well as months where payments were slightly overpaid or underpaid. To receive credit for these payments, a PSLF ECF must also be submitted certifying the applicant worked full-time for a qualifying employer.

Kevin Porath

“Now, all those past payments count,” Porath said.  “They didn’t before. Certify your employment as far back as you can.”

Porath also discussed changes in loan servicers, with some leaving and others coming online. All the changes mean that borrowers do well to pay close attention.

He suggests logging in to your student loan account at studentaid.gov to find out who is servicing your loan — and then update your information.

“What the servers have on file is how they communicate with you,” Porath said.

To qualify for PSLF, a borrower must make 120 qualifying payments while completing nonprofit or public service work for 10 years. The COVID forbearance payments of zero dollars which began in March 2020 count toward the total payments.

During the 90-minute webinar, Porath addressed questions about how the changes might impact attendees’ student loan debt favorably. He also discussed consolidation and refinancing issues as well as deferment and forbearance issues.

Mel Tubb

Mel Tubb, associate for Financial Aid for Service, is grateful to Porath for sharing his expertise. At the event Tubb heard from many attendees that they had lost hope but are now feeling renewed and ready to find liberation from their student loan debt.

The Rev. Alexandra Zareth, associate for Leadership Development and Recruitment for Leaders of Color, led participants through a breathing and centering exercise to begin the webinar.

The webinar was recorded and will be available at pcusa.org/loanassist.