The Department of Education announced its release of proposed regulations for PSLF on July 6, 2022:
“The Department proposes to make it easier for borrowers working in public service to gain progress toward forgiveness. Specifically, the Department proposes allowing more payments to qualify for PSLF including partial, lump sum, and late payments, and allowing certain kinds of deferments and forbearances (such as those for Peace Corps and AmeriCorps service, National Guard duty, and military service) to count toward PSLF. The Department also proposes to ensure the rules work better for non-tenured instructors whose colleges need to calculate their full-time employment. It also seeks comments on how best to consider the eligibility for PSLF of doctors providing services at nonprofit hospitals in states that prohibit their direct employment by that hospital and employees of for-profit early education programs that are licensed and regulated. The Department also proposes to create a formal reconsideration process in the regulations for borrowers whose applications are denied.”
“These proposed regulatory changes would build on parts of the limited PSLF waiver that the Department announced in October 2021. That waiver allows borrowers to count all their payments toward PSLF, provides for an automatic reconsideration process for borrowers whose payments or applications were previously denied, and provides for some automatic application of credit towards forgiveness. However, not all of the limited PSLF waiver provisions are included in the proposed regulations due to statutory restrictions. Borrowers seeking to count their payments on Federal Family Education Loans toward forgiveness should apply for PSLF before October 31, 2022.”
In the fact summary from the Department of Education, the significant issues are outlined:
“The Department proposes to make it easier for borrowers working in public service to obtain
forgiveness. Specifically, the Department proposes allowing more payments to qualify for PSLF by
allowing lump sum, and late payments, and allowing certain kinds of deferments and forbearances to
count toward PSLF. The Department also proposes to ensure the rules work better for non-tenured
instructors whose colleges need to calculate their full-time employment and seeks comments from
negotiators on how best to consider some other types of employment that do not currently qualify for
PSLF. Additionally, the Department proposes to create a formal reconsideration process in the
regulations for borrowers whose applications are denied.”
“These proposed regulatory changes would build on parts of the limited PSLF waiver that the Department announced in October 2021. That waiver allows borrowers to count all of their payments toward PSLF, provides for an automatic reconsideration process for borrowers whose payments or applications were previously denied, and provides for some automatic application of credit towards forgiveness. However, not all of the limited PSLF waiver provisions are included in the proposed regulations due to statutory restrictions. Borrowers seeking to count their payments on FFEL loans toward forgiveness should apply for PSLF before October 31, 2022.
Key provisions of the proposed regulations include:
• Removing overly stringent requirements that payments must be made in full within 15 days of
being due to count and allow for lump-sum and partial payments to count toward forgiveness,
recognizing that borrowers deserve some flexibility.
• Adopting a simpler definition of full-time employment to require employment of at least 30
hours a week, clarifying how to calculate hours for non-tenured instructors, and establishing
clearer definitions for the PSLF program.
• Clarifying the definition of a qualifying employer to ensure that most of an organization’s
employees are providing a qualifying public service.
• Allowing certain types of following deferments and forbearances to count toward PSLF. Those
statuses include:
o Cancer treatment deferment
o Peace Corps service deferment
o Economic hardship deferment
o Military service and post-active-duty deferments
o AmeriCorps forbearance
o National Guard Duty forbearance
o U.S. Department of Defense loan repayment forbearance
o Certain administrative forbearances (those that are not requested by the borrower)
used while the Department processes paperwork.
• Providing borrowers with a hold-harmless option to make up for all other periods in a
deferment or forbearance.
• Wherever possible, allowing for automation of progress toward forgiveness, so that those
people the Department knows have qualifying service don’t need to apply.
• Creating a reconsideration process for borrowers whose applications are denied.
• Seeking comment from the public on how to treat some other types of employment that do not
currently qualify for PSLF, particularly doctors providing services at a nonprofit hospital in states
that prohibit their direct employment by that hospital and employ
The Department of Education discussed the contractor and PSLF issue on pages 328-330 of the proposed regulations:
“The Department heard concerns from several negotiators and public commenters during the negotiated rulemaking process that there are borrowers who are working with qualifying government and nonprofit organizations but who are not eligible for PSLF because they are employed either directly through a contract with the qualifying employer or as the employee of an organization that has a contract with the qualifying employer. For instance, the Department heard from borrowers who work as contractors to provide support to K-12 students on a full-time basis but who are not eligible for PSLF because they are not employees of a qualifying employer. We also heard negotiators discuss public defenders in rural areas who work on a contract basis and also do not qualify for PSLF. The Department also heard about nonprofit hospitals where doctors work as contractors even while nurses or other medical professionals work as full-time employees. The Department is considering whether it should adjust eligibility to account for these types of situations. For example, a provision would note that, only for the purposes of PSLF, the eligible borrowers would include a borrower who works as a contractor at a qualifying employer if that qualifying employer is willing to certify the periods worked by that individual.”
“The Department seeks comments on whether to revise the program in this way or to address these issues in another manner. The Department also seeks feedback on whether qualifying employers would be willing to sign PSLF forms on behalf of their contractors; how to ensure consistency within and among employers about signing PSLF forms for contractors so there are not disparities based upon a borrower’s pay, level of education, or job function; and what additional guidance employers would need to implement this change. The Department is also interested in feedback about whether there could be ways to distinguish which types of contractors should be eligible, such as restricting eligibility to a contractor whose job site is co-located with a qualifying employer–either virtually, in-person, or with individuals served by the qualifying employer, such as students–versus one who works completely separately from the qualifying employer.”