UNITED STATES DEPARTMENT OF EDUCATION

 OFFICE OF POSTSECONDARY EDUCATION

Issue Paper #4: Improving the Public Service Loan Forgiveness (PSLF) Application Process

October 4-8, 2021

Issue: Improving the PSLF Application Process

Statutory citations: §455(m) of the Higher Education Act of 1965, as amended

Regulatory citations: 34 CFR § 685.219

Summary of issues: Under section 455(m) of the Higher Education Act of 1965, as amended, the 

Secretary must cancel outstanding balances on eligible loans for borrowers who are employed full-time 

in a public service job after they make 120 qualifying payments. Very few borrowers who applied for 

PSLF have received forgiveness. Many borrowers seeking cancelation of their loans through PSLF have 

faced problems in the application process, including in counting payments and eligibility of FFEL loans.

These issues have caused borrowers to not receive credit for all the payments they were expecting.

Although the Department is concerned that only payments made on Direct Loans count toward PSLF, 

this is a statutory limitation for PSLF that we cannot change without Congressional action.

The Department has identified several areas in the regulations governing the application process that 

can be improved and further streamlined:

• To request loan forgiveness for PSLF, all borrowers, including Federal employees and

servicemembers, are required to submit an application, even though the Department may

be able to obtain this information and approve such borrowers without an application. The 

same could be true of individuals covered in future data matches established by the 

Department.

• Under 34 CFR 685.219(c)(1)(iii), a qualifying payment is defined as the full scheduled 

amount paid by the borrower within 15 days of the due date. This narrow definition has 

created challenges in which borrowers may not receive credit for many payments, such as 

payments that are a few weeks late, multiple partial payments, and lump sum payments. 

This provision makes it harder for borrowers to catch up and keep making progress on PSLF 

if they fall behind. It also makes the program more difficult to administer because it has 

payment counting rules that are stricter than those used for income-driven repayment. 

• There are discrepancies between which payments count for PSLF and income-driven 

repayment (IDR), including certain deferments and forbearances. 

• The clock toward forgiveness is reset when borrowers consolidate their loans, even if the 

underlying loans were Direct Loans on which qualifying PSLF payments may have been 

made.

• There is no specific requirement for a FFEL lender to inform borrowers about their eligibility 

for PSLF.

• There is no formal process to request reconsideration of decisions by the Department 

related to PSLF. 
Improving the PSLF Application Process 2

Solutions: The Department believes that Public Service Loan Forgiveness must better deliver on its 

promises. While the Administration is working on multiple pathways to address challenges in this 

program, improved regulations can make payment rules less confusing, ensure borrowers do not 

accidentally lose progress toward relief through deferments and forbearances and consolidation, and 

give borrowers a clearer process for having decisions reconsidered. To accomplish these goals and 

address the issues identified above, the Department proposes the following initial for discussion with 

the negotiating committee:

Removing application requirements when the Secretary determines they do not need one. The 

Department is working to create data matches that would give us the information we would otherwise 

obtain from an application. Giving the Secretary flexibility to not require an application when it is not 

needed will assist in efforts to increase future automation in the PSLF program.

Payment Counting. The Department proposes to simplify regulations so that an amount paid by the 

borrower equal to the full scheduled payment due counts toward forgiveness, even if the payment is 

made in multiple installments or outside the 15-day payment window. This would also align the tracking 

of payments toward forgiveness between PSLF and IDR and would streamline payment-tracking overall.

For borrowers on paid ahead status we would adopt the currently allowed practice of paying ahead up 

until the borrower’s next recertification date on an income-driven repayment plan.

Allow certain deferments and forbearances to count as payments. The Department also proposes to 

count certain types of deferments or forbearances as payments, thereby aligning payments for PSLF and 

IDR. The Department proposes to expand the types of deferments and forbearances that qualify for 

PSLF to reflect two types of situations: (1) instances where status counts as qualifying employment and a 

qualifying payment and, (2) instances where the status counts as a payment if the borrower proves 

qualifying employment. 

Stop the clock restart upon consolidation. The Department is considering whether to stop resetting the 

clock for Direct Loans when included within a consolidation loan for a borrower, including those that 

also include non-Direct Loans. 

FFEL lender notifications to borrowers about PSLF eligibility. The Department proposes to require FFEL 

lenders to send annual disclosures to borrowers informing them of how they may access PSLF benefits,

and to respond to any verbal or written questions about PSLF from borrowers. The disclosures would 

include information about consolidation and the steps to take if the borrower wishes to pursue 

consolidation.

PSLF Reconsideration Process. The Department proposes to codify a formal reconsideration process in 

the regulations that will allow borrowers to request an appeal of their application when they believe

they have been wrongfully denied. A reconsideration process would include the following: the basis for 

which a reconsideration can be requested, reasonable timeframes to request reconsideration, and the 

provision of additional information. 

Last updated 9/29/2021