Legislation (S.8389-C/A.9523-B) Removes Barriers to Accessing Federal Public Service Loan Forgiveness Program by Clarifying Key Terms, Allowing Employers to Certify Employment
Announces Statewide Outreach Effort to Help Eligible New Yorkers Take Advantage of Federal Time-Limited Public Service Loan Forgiveness Waiver
Governor Kathy Hochul recently signed legislation to expand and simplify access to the federal Public Service Loan Forgiveness program statewide. The new legislation establishes uniformity around what qualifies as full-time employment for the purposes of accessing PSLF and allows public service employers to certify employment on behalf of workers, eliminating substantial barriers to applying for and accessing PSLF.
"If you spend your days working for the people of New York, you shouldn't spend your nights worrying about how to pay us back. This legislation acknowledges the significant contributions of our public servants, first responders, educators and more, by helping unlock federal loan forgiveness for countless members of New York's workforce," Governor Hochul said. "From the workers who ushered us through the pandemic to the everyday heroes who keep New York moving, public-sector and not-for-profit workers deserve to make the most of this benefit - but without headaches, delays, or confusion. I'm proud to sign this legislation that ensures public servants have the clarity and the support they need to access federal loan forgiveness, and I thank my partners in the Legislature for their thoughtfulness on this bill."
PSLF is a federal program that rewards and incentivizes public service work by cancelling a portion of borrowers' federal student loans. The program requires borrowers to be full-time employees of an eligible public service employer and make 120 qualifying payments towards their student loan, after which the remainder of their federal student loan debt is forgiven. Any student loan debt that is forgiven under this program will not be subject to tax under New York State tax law.
Currently, approximately 2.7 million people in New York work in the public or nonprofit sectors. Since 2007, the transformative PSLF program has helped eligible public service workers receive an average of $61,402 in debt relief - providing public servants the opportunity to spend on a mortgage, monthly payments for a car, basic necessities like groceries and gas.
Legislation (S.8389-C/A.9523-B) addresses several well-documented barriers to accessing PSLF by:
- Clarifying the legal definitions of key terms such as, "certifying employment," "employee," "full-time," "public service employer," "public service loan forgiveness form," and "Public service loan forgiveness program;"
- Setting a standard hourly threshold for full-time employment at thirty (30) hours per week for the purposes of accessing PSLF and clarifying standardized prep time to be included in such calculation for faculty and teachers; and
- Allowing public service employers to certify employment on behalf of individuals or groups of employees directly with the U.S. Department of Education.
On October 6, 2021, the Department of Education announced time-limited changes to the PSLF program to make it easier for eligible borrowers to have their federal loans forgiven ("PSLF Waiver"). The PSLF Waiver allows borrowers to count payments made on all federal loan programs or repayment plans toward forgiveness, including loan types and payment plans that were not previously eligible. New Yorkers working in public service - in government or at a not-for-profit - with outstanding student loans may be eligible for forgiveness under the PSLF Waiver even if they were previously denied. Borrowers only have until October 31, 2022, to take advantage of the PSLF Waiver.
Governor Hochul also announced a statewide effort to inform New Yorkers of the PSLF Waiver and encourage eligible workers to apply for loan forgiveness before the end of the PSLF Waiver period. The Department of Financial Services (DFS) has secured commitments from organizations representing more than 8,500 public and not-for-profit employers to distribute information to their workforces in the coming weeks and assist them in applying to the PSLF program before the Waiver expires. Groups joining this outreach pledge include the United Federation of Teachers, Human Services Council, Nonprofit New York, New York Council of Nonprofits, New York Conference of Mayors, and NYS Association of Counties. DFS will also be offering PSLF workshops across the state in the coming weeks. These efforts build on New York's commitment to supporting student loan borrowers.
In August, based on trends identified in DFS examinations of student loan servicers, the Department issued first-in-the-nation guidance outlining expectations for informing borrowers about the PSLF program and best practices to follow. New Yorkers can visit dfs.ny.gov to learn more.