COVID-19: PSLF Forgiveness and Eligibility

The COVID-19 relief measures have helped student borrowers save money during the suspended payment period beginning March 13, 2020- September 30, 2021. But what if your PSLF forgiveness period occurs during COVID-19 suspension?

You hit the 120 monthly payments for PSLF! Does COVID-19 suspension affect your PSLF application? Let’s take a look at the responses from FedLoan Servicing:

Can I apply for PSLF during the payment suspension period?

If you reach your 120 qualifying payments during the payment suspension period, you can still apply for and receive PSLF at this time. However, you must be working for a qualifying employer at the time you submit the PSLF form and at the time the remaining balance on your loan is forgiven. If you’re eligible for forgiveness, the amount forgiven will be the principal and interest that was due after you made your 120 qualifying payments.

How will reduced work hours impact my PSLF eligibility?

You must continue to work full-time (either 30 hours per week or what your employer considers to be full-time, whichever is greater) for a qualifying employer to have the suspended payments count toward PSLF. You can meet the full-time requirement by being employed part-time for multiple employers, but they must all be qualifying employers.

If you no longer work full-time for a qualifying employer or lost your employment (or were laid off or furloughed), your suspended payments will not count toward PSLF. You don’t lose your eligibility for PSLF entirely. If you later meet the qualifying employer and full-time status requirements, payments you make at that point will count toward PSLF and can be added to the count of qualifying payments you had when you originally went below full-time or lost your employment with a qualifying employer.

I have submitted a PSLF form (previously a PSLF application or Employment Certification Form) in the last year, and my federal student loan servicer was not FedLoan Servicing. What’s the status of my transfer and PSLF form?

In March 2020, the U.S. Department of Education (ED) implemented the CARES Act provisions and in doing so, stopped certain loan transfers from other servicers to the PSLF servicer, FedLoan Servicing. The CARES Act flexibilities were set to expire on Sept. 30, 2020, and since that time, there have been extensions that now last through Sept. 30, 2021.

ED has instructed its servicers to resume transfer activity, including transferring PSLF borrower accounts to FedLoan Servicing. The transfer of account information and manual processing of this information onto the FedLoan Servicing system can take some time, and we expect this process to be complete in the next few months. Regardless of your servicer or the time it takes to process these transfers, there is no impact to your eligible PSLF payment credits. You still must verify employment for these periods of time in order to receive qualifying payment credit.

Your new federal loan servicer, FedLoan Servicing, will communicate with you after your loans have been fully loaded to its system. Your post-transfer communication will explain that your federally owned loans have been transferred, and FedLoan Servicing will assist you with your account and navigating the PSLF Program on ED’s behalf going forward.

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