With the leading edge of student loan borrowers who could be eligible for public service loan forgiveness (PSLF) based on years of repayment upon us, increasing attention on the already-controversial program over the past year has revealed confusion, insufficient data, misinformation, and misunderstanding. One area of confusion and misunderstanding concerns the choice of repayment plan that would qualify a borrower for eventual forgiveness. A bipartisan bill introduced in the House on November 15, and a parallel Senate version, seek to ensure that borrowers who chose a repayment plan that would not otherwise qualify them for PSLF do not lose their chance at loan forgiveness. The bill seeks to extend PSLF eligibility to borrowers who have already invested up to 10 years toward making 120 on-time payments, but may have been unaware that the payment plan in which they enrolled was not sanctioned for forgiveness.
Current PSLF regulations under 685.219(c) accept towards the 120 qualifying payments any payment made under:
the standard 10-year repayment plan [685.208(b)],
the income-based repayment plan (IBR—685.221),
an income-contingent repayment plan (ICR—685.209),
or another repayment plan if the amount of the monthly payment is no less than the amount that would have been paid under the standard repayment plan.
H.R. 4399 eliminates the last bullet above from the list of qualifying payments, and instead defines “comparable payments” which would count towards the required 120 payments. To qualify, the borrower must (1) be in an IBR or ICR plan at the time he or she applies for public service loan forgiveness, and (2) have made an initial monthly payment under the non-qualifying plan that was no less than the amount the borrower is paying under the IBR or ICR plan, or no less than the amount that would have been required under an IBR or ICR plan when the borrower first entered the non-qualifying payment plan. If the borrower’s initial payment met that requirement, all subsequent payments in the non-qualifying plan made before the borrower switched to an IBR or ICR plan are counted as well.
If the borrower’s payments under the non-qualifying plan do not meet the comparable payment criteria, he or she could request an extended review of his or her repayment history, to determine whether any monthly payment made under a non-qualifying plan (regardless of the comparability of the initial amount) is no less than the amount that would have been required, based on the borrower’s income in that year or month, under an IBR or ICR plan. The Department of Education would have to perform this analysis for every payment made under the non-qualifying plan, and count all payments that successfully meet the comparison towards the 120 total.
Publication Date: 11/22/2017