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Public Service Loan Forgiveness

What you need to know about New York State’s new law

Overview

On September 15, 2022, Governor Hochul signed legislation to expand and simplify access to the federal Public Service Loan Forgiveness (PSLF) program for public service workers statewide. The new law is included in Article 34 of the Labor Law and establishes uniform qualifications for full-time employment to access PSLF and allows public service employers to certify employment on behalf of workers, eliminating substantial barriers to applying for and accessing PSLF.

The 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 loans, after which the remainder of their federal student loan debt can be forgiven if proper documentation is submitted to the federal government.

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 mortgages, monthly payments for a car, and basic necessities like groceries and gas.

The legislation addresses several well-documented barriers to accessing PSLF by:

  • 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 teacher
  • Allowing public service employers to certify employment on behalf of individuals or groups of employees directly with the U.S. Department of Education
  • 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"

Who is a “public service employer”?

A “public service employer” is any employer designated as a public service organization or employer by the U.S. Department of Education for PSLF purposes. The term includes any state, county, city, or other local government employer, including any office, department, independent agency, school district, public college or university system, public library system, authority, or other body, including the legislature and the judiciary, as well as any employer that has received designation as a tax-exempt organization pursuant to section 501(c)(3) of the U.S. Internal Revenue Code. This term does not include a federal or tribal nation government organization, agency, or entity.

If you work for a not-for-profit organization that is not tax-exempt under Section 501(c)(3) of the Internal Revenue Code, it can still be considered a qualifying employer if it provides certain types of qualifying public services.

Who is an “employee”?

An “employee” is someone who works for a public service employer, regardless of whether the public service employer considers their work full-time or part-time, contingent, or contracted.

What loans are eligible to be forgiven?

Any loan received under the William D. Ford Federal Direct Loan (Direct Loan) Program qualifies for PSLF. Student loans from private lenders, such as the Federal Family Education Loan (FFEL) Program and the Federal Perkins Loan (Perkins Loan) Program, do not qualify for PSLF. However, they may become eligible if you consolidate them into a Direct Consolidation Loan.

Who is eligible to have their loans forgiven?

A borrower must be an employee who is directly employed full-time by a qualifying government or nonprofit agency to be eligible for the PSLF program.

What qualifies as “full-time” employment for PSLF?

"Full-Time" (for PSLF purposes only) means working at least an average of 30 hours per week or at least an average of 30 hours per week throughout a contractual or employment period of at least 8 months in a 12-month period unless a lower U.S. Department of Education standard applies. The term “contractual” or “contingent” addresses qualified seasonal or term work by borrowers who work the requisite time to qualify as full-time. It is not intended to cover independent contractors who are disqualified from PSLF by federal law. All public service employers in NYS must now use this 30 hour per week standard, which may be a departure from their current practice. 

To learn more, visit the U.S. Department of Education PSLF website for information on how part-time jobs may be combined to meet the full-time work requirement.

How are teacher and faculty lecture and classroom hours calculated for PSLF?

An hours-worked conversion factor applies to faculty and teacher employees. A public service employer certifying their employment must credit 3.35 hours worked for each hour of lecture or classroom time, regardless of hours worked, including hours worked prior to the September 15, 2022 effective date for this law. This credit would not supersede any greater adjustment factor established by CBA or employer policy in recognition of additional work associated with lecture or classroom time for purpose of the PSLF program.

When determining whether an employee is considered full-time for certifying employment for the PSLF program only, a public service employer cannot treat any adjusted total hours worked differently from hours worked without an adjustment factor.

What responsibility does a public service employer have to certify employment for the PSLF program?

A public service employer cannot unreasonably delay certifying employment.

  • Direct Certification: If authorized by the U.S. Department of Education, public service employers are permitted to send information necessary for employment certification for individual employees or groups of employees (past or present) directly to the U.S. Department of Education or its agents.
  • Other Certifications: If a public service employer does not directly certify employment with the U.S. Department of Education, then it must annually provide notice of renewal and a copy of the PSLF form with the employer information and employment certification sections of the form already completed to:
    • An employee who requests a public service loan forgiveness form;
    • Any current employee for whom the public service employer has previously certified employment; and
    • An employee who is ending work with the public service employer.

The partially completed form should reflect employment for the prior calendar year and may reflect longer periods of employment as necessary.

Public service employers must comply with this law:

  • No later than November 14, 2022 for direct certifications
  • No later than January 1, 2023 for other certifications

What if my employer won’t certify employment?

For any issues involving employment certification, please reach out to the New York State Department of Labor’s Labor Standards Division at [email protected].

More PSLF Program Information