1. Barbara Hoblitzell, Ian Foss, and Dan Weigle | Dec. 2015 U.S. Department of Education 2015 FSA Training Conference for Financial Aid Professionals Public Service Loan Forgiveness Session 5

2. PSLF Basics 2 2 120 Qualifying Payments In Qualifying Repayment Plans …When Applying For & Receiving PSLF On Direct LoansWhile Working For A Qualifying Employer… Per IRS, forgiven amount is not taxable income

3. PSLF Eligible Loans Federal Direct Student Loan PSLF is only for Direct Loans, but all Direct Loans qualify Parent PLUS Loans - NO Perkins Loans - NO FFELP Loans - NO Direct Consolidation Loan - YES 3

4. PSLF Qualifying Employment 4 501(c)(3) not-for-profit organization Other not-for-profit organizations providing specific qualifying services Any government organization It matters where you work, not what you do… 4

5. PSLF Full-Time Employment Full-time is the greater of: Employer’s definition of full-time 30 hours per week May work multiple qualifying part-time jobs that equal full-time For borrowers at a non-profit organization, hours spent in religious instruction, worship services, or proselytizing do not count 5

6. PSLF Qualifying Repayment Plans 10-Year Standard IBR ICR Pay As You Earn REPAYE Others ≥ 10 Year Standard Income-driven plans are most likely to yield a balance for forgiveness 6

7. PSLF Qualifying Payments 120 separate monthly payments* After October 1, 2007 Do not need to be consecutive Must be for full amount due under plan Must be made within 15 days of due date *Exception for AmeriCorps, Peace Corp, and DOD 7

8. PSLF Payment Amount Multiple partial payments Count as one payment All must be received within 15 days of due date Payments made when not required Do not qualify Lump sum payments Count as one payment Exceptions for AmeriCorps, Peace Corp, and Department of Defense borrowers 8

9. Billy Borrower: Is single with no dependents and lives in Georgia Has an AGI of $35,000 that rises at 5% per year and Has $50,000 in Direct Loan debt ($23,000 of which is subsidized), all of which has a 6% interest rate Borrowed for graduate school 9 Modeling PSLF - Billy Borrower

10. Modeling PSLF 10 years $50,501 ICR $22,459 10 years $36,927 IBR $45,065 10 years $24,618 PAYE $55,333 Time in Repayment Total Paid Total Forgiven 10 14 yrs., 8 mos. $76,339 ICR $0 18 yrs., 9 mos. $91,713 IBR $0 20 years $71,782 PAYE $36,538 Time in Repayment Total Paid Total Forgiven Without PSLF With PSLF 10 years $24,618 25 years $108,426 REPAYE $0 $51,746

11. Taxation of Forgiveness - IDR 11 ICR Forgiven Amount = Income Forgiven Amount = $0 Tax = $0 IBR Forgiven Amount = Income Forgiven Amount = $0 Tax = $0 PAYE Forgiven Amount = Income Forgiven Amount = $36,538 Marginal Tax Bracket* = 28% Tax* = $10,231 REPAYE Forgiven Amount = Income Forgiven Amount = $0 Tax = $0 *Based on Billy’s year 20 income of $88,455, 2015 tax brackets, uncomplicated tax filer.

12. Taxation of Forgiveness - PSLF 12 ICR Forgiven Amount ≠ Income Forgiven Amount = $22,459 Tax = $0 IBR Forgiven Amount ≠ Income Forgiven Amount = $39,927 Tax = $0 PAYE Forgiven Amount ≠ Income Forgiven Amount = $55,333 Tax = $0 REPAYE Forgiven Amount ≠ Income Forgiven Amount = $51,746 Tax = $0

13. PSLF Employment Certification Borrower submits form to FedLoan Servicing FedLoan Servicing determines borrower has direct loans Borrowers who want confirmation that employment and payments qualify should submit the Employment Certification Form to FedLoan Servicing FedLoan Servicing determines employment qualifies All federally- held loans transfer to FedLoan Servicing FedLoan determines qualifying payments were made during employed period Borrower submits another Employment Certification Form FedLoan determines qualifying payments were made during employed period 13

14. PSLF Employment Certification Form 14

15. PSLF ECF 15

16. PSLF ECF 16

17. PSLF ECF 17

18. PSLF ECF 18

19. Common ECF Issues Inaccurate or Missing End Date on ECF Form  Blank end date when the borrower is still employed vs. checking “still employed”  Check Box 15 to certify accuracy  Missing required fields (such as EIN number) Payment Tracking  Must submit an ECF for an updated qualifying payment count  Payments made to other servicers (not just FedLoan) can be counted toward PSLF 19

20. 20 Eligible Loan Types Employer Eligibility All Federal loans can be eligible through Direct Loan Consolidation. Consolidation and PSLF Appropriate Time to Begin Tracking for PSLF Qualifying Payment Plans Common Program Misconceptions Qualifying employment for the PSLF Program is not about the specific job a borrower does, but rather, who the employer is. Qualifying repayment plans include all income-driven repayment plans and the 10-year Standard Repayment Plan. Consolidating Direct Loans will erase any qualifying payments made. Borrowers shouldn’t wait to submit an ECF until after they have made 10 years of qualifying payments.

21. PSLF Portfolio Number of borrowers submitting ECF 21 2015 Source: FedLoan Servicing

22. PSLF Portfolio Number of borrowers with DL & Qualifying Employment 22 2015 Source: FedLoan Servicing

23. PSLF Qualifying Employment 23 Source: FedLoan Servicing 23 62% 0% 38% 0% Government 501(c)(3) AmeriCorps Peace Corps Other non-profit Approved ECFs by Employer Type

24. PSLF Processed ECF’s 24 564,325 Processed Source: FedLoan Servicing 392,571 (70%) Approved 171,754 (30%) Denied

25. PSLF Processed ECF’s 25 Denial Reasons Source: FedLoan Servicing Missing/Incorrect Information Employer Not Qualified No Eligible Loans 44% 16% 40%

26. PSLF Qualifying Payments 26 Source: FedLoan Servicing

27. PSLF Qualifying Repayment Plans 27 Source: FedLoan Servicing

28. PSLF Portfolio Amount borrowed by borrowers who had employment and loans certified for PSLF 28 Source: FedLoan Servicing

29. PSLF Portfolio Annual adjusted gross income of borrowers who had employment and loans certified for PSLF 29 Source: FedLoan Servicing

30. PSLF School Resources 30 Borrower Toolkits for outreach to student borrowers at MyFedLoan.org/schools Reporting Available –Customized e-mail communications showing the number of borrowers for your institution who have submitted an Employment Certification Form –Student detail information through the FedLoan Servicing School Portal Training resources and personalized support at MyFedLoan.org/training –Presentation available for download –Sector-based, personalized support

31. QUESTIONS? Visit StudentAid.gov/publicservice for more information about PSLF. 31