USPS & PSLF: Postal Employees Qualify for Student Loan Forgiveness

Postal employees may benefit from the Public Service Loan ForgivenessPublic Service Loan Forgiveness (PSLF)A federal program that forgives the remaining balance on Direct Loans after 120 qualifying monthly payments made while working full-time for a government or qualifying nonprofit employer. Program and other discharge options offered by the U.S. Department of EducationU.S. Department of Education (ED)The federal agency that oversees federal student aid programs, issues regulations for federal student loans, and is the ultimate lender on Direct Loans..

Full-time United States Postal Service employees can have their federal student loan debt written off after 10 years of work. The Public Service Loan Forgiveness Program is open to all borrowers who spend at least a decade working for government agencies or certain nonprofit organizations and make 120 qualifying monthly payments on their federal Direct Loans.

The PSLF Program is the main forgiveness option for most postal employees, but it isn’t the only one. The Education Department offers other student loan forgiveness programs that wipe away the remaining balance USPS employees owe on their federal loans. The best choice for you depends on your loan balance and your work history with the post office.

Public Service Loan Forgiveness

The precise eligibility requirements of the PSLF Program, which was created in 2007, are complex. To qualify, you must work for the postal service and:

• Work full-time. Postal employees are considered full-time if they’re assigned to work schedules of five 8-hour days in a service week. Part-time workers can qualify for relief if they work two part-time jobs simultaneously with a combined average of at least 30 hours per week at a qualifying employer (for example, law enforcement, military service, public health, and so on). Use the PSLF Help Tool to check your employer’s eligibility.
• Have eligible loans. Only loans made under the Direct LoanDirect LoanA federal student loan made directly by the U.S. Department of Education under the William D. Ford Federal Direct Loan Program. Most federal student loans issued since 2010 are Direct Loans. Program qualify, including Direct Subsidized and Unsubsidized Loans, Direct Consolidation Loans, and Grad PLUS and Parent PLUS Loans. Federal Family Education Loans are eligible if consolidated.
• Make 120 qualifying payments. Payments must be made on time, for the ​full amount due, and under a qualifying repayment plan — the Standard Repayment Plan or one of the income-driven repaymentIncome-Driven Repayment (IDR)A category of federal student loan repayment plans that calculate monthly payments based on income and family size rather than loan balance. Any remaining balance can be forgiven after 20–25 years of qualifying payments. plans (for example, the income-based repaymentIncome-Based Repayment (IBR)A federal income-driven repayment plan that caps monthly payments at 10% or 15% of discretionary income, depending on when the loans were taken out. Remaining debt is forgiven after 20 or 25 years of qualifying payments. plan).

For years, these unusually complex rules and poor customer service from the program’s previous administrator, FedLoan Servicing, frustrated thousands of student loan borrowers and locked many out of relief.

But the Biden administration has ​worked to change that.

Last October, the troubled program got a temporary overhaul. The Education Department announced that for a limited time, it would soften the rules to count payments made toward the wrong loans, under the wrong plan, and those that were late or for less than the ​full amount due.

You can apply for the Limited PSLF Waiver and the PSLF Program by submitting an employment certification formEmployment Certification Form (ECF)The federal form used to certify qualifying employment for Public Service Loan Forgiveness. Borrowers submit the form to their servicer to have qualifying payments counted toward PSLF. to the new company handling the program, MOHELAMOHELAThe Missouri Higher Education Loan Authority, a federal student loan servicer that currently handles accounts for borrowers in Public Service Loan Forgiveness and other federal loan portfolios..

Learn More: Changes to PSLF

Download the PSLF Application

Income-Driven Repayment Plan Forgiveness

Income-driven repayment forgiveness erases your remaining balance after paying a portion of your income for 20 or 25 years. IDR forgivenessIDR ForgivenessThe forgiveness of any remaining federal student loan balance after a borrower has completed 20 or 25 years of qualifying payments under an income-driven repayment plan, depending on the specific plan. is open to all USPS employees, full-time and part-time. If the loans are consolidated it’s also available to borrowers with debt FFEL Loans and Perkins Loans.

To get started, you first must enroll in an IDR plan. You can apply online at the Federal Student AidFederal Student Aid (FSA)The office within the U.S. Department of Education that manages federal grants, work-study, and student loans. It runs the FAFSA, the StudentAid.gov website, and oversees the federal loan servicers. website, studentaid.gov. You can also submit a paper application to your student loan servicerLoan ServicerThe company that manages a borrower's federal student loan account, processes payments, and handles applications for repayment plans, deferment, forbearance, and forgiveness on behalf of the U.S. Department of Education..

Once enrolled, you must make at least 240 student loan payments before the Education Department writes off your balance. If you borrowed loans for graduate school, you must make 300 payments.

On April 19, the department announced it would use one-time fixes to count past payments and some periods of deferment and forbearance toward the 240 or 300 needed for income-driven repayment forgiveness. Those adjustments are underway. Your account on the Federal Student Aid website will reflect your payment count early next year. Read more about the IDR Waiver.

Learn More: What is Income-Driven Repayment?

Borrower Defense to RepaymentBorrower Defense to RepaymentA federal process for discharging Direct Loans when the school misled the borrower or engaged in misconduct related to the loan or the educational services it promised.

• If your school defrauded you, the Borrower Defense to Repayment program can discharge your student debt. In the past two years, the Education Department has discharged $7.9 billion in debt for 690,000 borrowers through approved borrower defense claims, as of June 1.

You might qualify for this program if you believe your school defrauded you by:

• Intentionally misled you about your education program.
• Violating certain state laws, such as consumer protection statutes or laws related to your loan or educational services.

You can apply for relief if your school isn’t closed and even if you’re eligible for PSLF, IDR forgiveness, or another program. But you can’t submit a claim for private student loans.

Learn More: Borrower Defense School List 2022

Total and Permanent Disability DischargeTotal and Permanent Disability Discharge (TPD)A federal loan discharge for borrowers who are totally and permanently disabled, as documented by the Department of Veterans Affairs, the Social Security Administration, or a physician's certification.

Postal workers and other government employees who become totally and permanently disabled may get a discharge of their federal student loans. And anyone with a physical or mental disability recognized by the Social Security Administration or Veterans Administration will have their loans automatically discharged through a data match.

If your disability isn’t on file with the SSA or VA, you must still apply for a disability discharge. Ask your treating physician to complete the discharge application.

Learn More: What Disabilities Qualify for Student Loan Forgiveness?

Another Option: Student Loan RefinancingRefinancingTaking out a new private loan to pay off one or more existing student loans, usually to lower the interest rate or change the repayment term. Refinancing federal loans into a private loan eliminates federal benefits like IDR and PSLF.

If waiting for student loan forgiveness doesn’t make sense because your balance is low or you’re leaving the post office, you may be able to save money by refinancing your debt with a private lender.

If you have a strong income and a credit score in the high 600s, you may qualify for a lower interest rate and better repayment terms. And if you’re missing either one of those things, adding a cosignerCosignerA person who signs a loan agreement alongside the primary borrower and becomes equally responsible for repayment. Cosigners are common on private student loans when the student has limited credit or income history. who has both can help.

Keep in mind that if you refinance federal loans, you’ll lose eligibility for PSLF and other forgiveness programs.

UP NEXT: Who Qualifies for Student Loan Forgiveness

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