Physicians, Public Service Loan Forgiveness (PSLF) and Why You Shouldn’t Believe 99% of What You Read
You’ve read the headline. You’ve seen the articles. They’re talking about it in the hospital and your colleagues are freaked out. Maybe you’ve wondered if you should be worried? You know the article I’m talking about right? It usually starts something like this: 99% of PSLF applicants are being denied loan forgiveness. Maestro, que disaster music as click-bait fueled financial panic sets in!
Here’s the TL;DR—Don’t panic. These articles are designed to get your attention and to make you afraid but they do they clearly represent what’s going on. The simple truth is this: over $80,000,000 in student loans have been forgiven under the PSLF program. However, that doesn’t mean you’re in the clear. In fact, if you’re planning on using the PSLF program, there are critical concepts that you can’t afford to ignore. So come with me friends as we explore the wonderful, clear-as-mud, PSLF program and the steps you should consider to be successful in your pursuit of loan forgiveness.
So what’s going on with these articles?
When it comes to these articles, I believe there are two important things to understand:
- People are getting denied for PSLF; however
- The why behind the denials is being glossed over.
As a result, it’s easy to infer that denials are occurring to borrowers who are doing everything correctly; however, that’s not what’s happening. Let’s take a deeper look at the reasons people are getting denied.
Primary reasons that borrowers are being denied PSLF
- 55% – Not enough qualifying payments
- 24% – Missing information
- 15% – Loans that don’t qualify for PSLF
- 2% – Employment date documentation
- 2% – Employer is not an eligible institution
These issues are often easily rectified—”easily” doesn’t mean pain-free—and typically stem from errors on the Employer Certification Form (ECF). This is where understanding the “PSLF Trifecta” is essential.
The PSLF Trifecta consists of:
- Employer – being employed “full-time” by a qualifying institution. Typically a government organization or 501c3 non-profit (click to view what kinds of employers qualify)
- Type of debt – having the correct type of student loans. These are typically Direct Loans (click to see which student loans qualify)
- Repayment mode – choosing a qualifying repayment mode. This means an income-driven repayment mode such as: PAYE, REPAYE, IBR and the Standard 10-Year (click to see what repayment modes qualify)
For early adopters who painstakingly educated themselves on these topics, stayed on top of the employer certification forms, and successfully reach their 120th payment, forgiveness does occur. A deeper look at the stats in the same report that many of these articles cite show:
- 845 individuals have had their loans discharged by the federal government
- $52,045,282 in federal student loans have been forgiven
And that’s just the baseline PSLF program. One positive impact of these stories circulating was a realization by the government that they had a significant problem on their hands. Due to how convoluted the system was, even the most well-intentioned borrowers were finding it difficult to make it through the program unscathed. As such, congress passed a temporary funding package to provide forgiveness to borrowers who had, at some point on their journey toward PSLF, unknowingly made a change that invalidated their prospects of PSLF. This Temporary Expanded Public Service Loan Forgiveness (TEPSLF) program has provided forgiveness to an additional 681 borrowers counting for a total of $28,171,850 in student loan debt.
So to recap, as of the last PSLF report in June 2019 we’ve seen:
- 1,526 unique borrowers receive forgiveness; and
- Over $80M in federal debt discharged.
PSLF is happening but that doesn’t make the process any less confusing or frustrating; so let me leave you with some best practices.
Best practices for successfully receiving PSLF:
Step 1: Be a meticulous note-taker. How many qualifying payments should you have made in a particular year? Did you call in to your servicer? Who did you talk to? What did they say? What changes were made? Every time adjustments are made or a conversation is had, take notes in a master student loan note document. Hang on to this document and keep it updated, as you might need it to prove your PSLF case down the road!
Step 2: Verify that your student loans qualify for PSLF
Step 3: Make sure that the repayment mode you’re using qualifies for PSLF
Step 4: Understand the difference between working at and working for a qualifying institution. Emergency, radiology, anesthesiology, and any other small-group docs, in particular, should pay close attention to this one. PSLF is only concerned with who pays i.e. who employs you. Just because you perform procedures at a 501c3 hospital doesn’t mean you’re employed by them and as such, it could be the case that your payments aren’t counting towards PSLF.
Step 5: Submit your employer certification form (ECF) annually and audit the number of qualifying payments that they document. Does the number match up with what you anticipated you’d have? If not, open an inquiry with your student loan servicer immediately.
Step 6: Spend the time to educate yourself on this program. Ultimately, we are the ones responsible for our own financial well-being and no one else is going to care more about your eligibility for this program than you.
What do you think? Are you worried about the PSLF program? Was this article helpful; why or why not? Feel free to send me your questions and thoughts—I’d love to hear from you.
All data on loan forgiveness is from the June 2019 PSLF program data report: https://studentaid.ed.gov/sa/about/data-center/student/loan-forgiveness/pslf-data