Public service employees receive a win

By Andrew Zashin*

Public service employees with student loan debt received some very exciting news recently. On Oct. 6, the U.S. Department of Education announced a temporary change to the Public Service Loan Forgiveness Program. The temporary change is appropriately named the Temporary Expanded Public Service Loan Forgiveness Program.

To give temporary initiative context, it is important to understand the original PSLF program. Congress created the PSLF program in 2007 to incentivize people to work in government or for nonprofits by promising people student loan forgiveness. In general terms, if an individual took out federal student loans and subsequently worked full time in public service for 10 years, that individual would have his or her student loans forgiven.

However, prior to the recent temporary expansion, the program was only available to borrowers who have a specific type of federal government student loan, known as direct loans. Payments made under extended repayment plans, graduated repayment plans and other fixed or level plans with terms greater than 10 years were excluded. Moreover, the U.S. Department of Education has previously allowed public service employee borrowers to consolidate their debt into direct loans but refused to count repayments made before the consolidation.

This recent expansion of the PSLF program, allows student borrowers to count all payments made on loans from the Federal Family Education Loan program or Perkins Loan Program. The temporary expansion also waives restrictions on the type of repayment plan and the requirement that payments be made in the full amount and on time for all borrowers In other words, any prior payments made while working for a qualifying employer will count as a qualifying payment, regardless of loan type or repayment plan. Even better, the changes are retroactive to the creation of the PSLF program in October 2007 and student loan amounts forgiven under the PSLF Program and the TEPSLF opportunity are not considered income for federal tax purposes.

To receive these benefits under the TEPSLF program, public service employees must consolidate their student debt by Oct. 31, 2022, into direct loans. But which public service employees borrowers qualify?

According to the U.S. Department of Education, full-time employment with the following types of organizations qualifies for PSLF: Government organizations at any level (U.S. federal, state, local or tribal) – this includes the U.S. military; and not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code. In addition, serving as a full-time AmeriCorps or Peace Corps volunteer also counts as qualifying employment for the PSLF program.

A public service employee is considered to work full time if they meet their employer’s definition of full time or work at least an annual average of 30 hours per week. Those employed in more than one qualifying part-time job at the same time are considered full-time if he or she works a combined average of at least 30 hours.

It is important to note that only federal loans taken out by students qualify under both the PSLF and TEPSLF programs. For instance, Parent PLUS loans are not eligible under the program. In addition, most periods of non-payment including in-school deferments, hardship forbearances, and periods of default will still not count towards either program and, payments made on private student loans do not qualify.

To find out if you qualify for loan forgiveness under the PSLF program or the TEPSLF program or if you have questions about either program, visit

This article originally appeared as a column for the Cleveland Jewish News.

2023-11-10T13:38:07-05:00October 17th, 2021|Loan Forgiveness, Public Service, Student Loans|

Hot topics in the student loan crisis explained

By Andrew Zashin*

Although some object to labeling it a “crisis,” there is at least widespread consensus that, whatever we call it, our higher education system could be improved. Student loan debt in the United States tops $1.6 trillion. And as many as one in 10 of those 44 million borrowers are defaulting on their debt.

Higher education costs and student loan debt are hot topics, and every 2020 presidential candidate has some plan to address the rising costs of secondary education, the debt load and defaults on that debt affecting many students today. From one side, there have been proposals for free college and widespread forgiveness of federal debt. From the other side, there have been proposals for different forms of tax relief related to loans, different repayment programs and some discussion of the current system of federal grants and loans. Here are some of the hottest issues today.

  • Student loan forgiveness: many progressive Democrats are pressing for student loan forgiveness. Sen. Elizabeth Warren, D-Mass., for example, has suggested canceling $50,000 in debt for households with income of up to $100,000. Households of up to $250,000 would be eligible for some cancellation on a graduated scale. Ostensibly, there would be a mechanism to seek cancellation of privately funded debt as well, and the forgiven debts would not be taxable as income. Others vary in their opinions as to how this would be structured, but there is definitely a progressive push toward widespread cancellation of existing debt.
  • School costs: another sweeping change suggested by progressives is, of course, the idea of “free college.” Sen. Bernie Sanders, I-Vt., suggests eliminating tuition and fees at all public colleges, universities, community colleges, tribal schools, trade schools and apprenticeship programs. He would then look to divert more funding to already existing programs such as work-study and Pell grants to help out families living closest to the poverty level close the gap on other expenses of schooling, like housing and food. While campaigning in 2016, President Donald Trump was in favor of pushing the schools to do more to help lower income students attend, specifically by using endowment dollars for this purpose, rather than relying on federal funds.
  • Income-based repayment plans: Democratic presidential candidate Andrew Yang proposes loan repayment plans that are income based, up to 10% of income, paid for a period of 10 years, after which time the remaining debt would be forgiven. Trump is pressing for streamlining currently available repayment plans into one similar plan, with a repayment cap of 12.5% of income, paid for a period of 15 years.
  • Bankruptcy: Common wisdom says student loans are not dischargeable in bankruptcy at all. This is not quite true, but the burden is so high as to make it nearly impossible. Generally, an effort must have been made to pay back the student loans, and a significant financial hardship must be shown, both in that a basic standard of living could not be sustained if the loans are repaid, and that the hardship would last for the majority of the payback period. There has been some talk around better defining what an “undue hardship” is and, in general, making it easier to discharge student loans in bankruptcy.
  • Tax breaks: The recent Tax Cuts and Jobs Act did away with taxation on student loan discharge for death and disability, which decreases the already heavy burden faced by those who have experienced the death or disability of a breadwinner. But the future of the student loan interest deduction is unclear. Even though it did remain in the final version of the Tax Cuts and Jobs Act, Trump originally proposed eliminating it. This deduction provides up to $2,500 in deduction of interest paid on a student loan. There are a number of very different thoughts on how to tackle the problems of higher education costs and rising student loan debt. This is sure to be a hot topic throughout the 2020 election and beyond.

This article originally appeared as a column for the Cleveland Jewish News.

2023-11-10T13:38:10-05:00November 4th, 2019|Debt, Student Loans, Tax Breaks|
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