Federal Student Aid just announced big changes to Public Service Loan Forgiveness.

In the past when a borrower made a lump sum payment or otherwise pre-paid their loan, those payments would only count as one qualifying payment toward PSLF. In August, FSA’ changed their policy and as a result prepayments and lump sum payments will count for as qualifying payments if a borrower has a valid employment certification on file and other usual eligibility conditions are being met. This news is HUGE for those working in public service and seeking PSLF.

FSA also announced they are launching a redesigned PSLF Help Tool for borrowers on the website. The tool will help borrowers determine their eligibility and even apply for PSLF using a single  form for PSLF and Temporary Expanded PSLF (TEPSLF). Following the update, borrowers will only need to submit this one form to certify their employment or to be considered for forgiveness under PSLF or TEPSLF. 



The closeout deadline for the 2018-2019 Direct Loan Program Year is Friday, July 31, 2020. This is the last processing day before the end of the program year. According to a recent reminder from Federal Student Aid, all school data must be received and accepted by this date to be included in a school’s final Ending Cash Balance for the year.

There are several basic steps that a school must undertake to successfully close out their Direct Loan program at the end of each award year.

First, schools should be sure to reconcile to an Ending Cash Balance of $0 and Total Net Unbooked Disbursements of $0, as reflected on your monthly School Account Statement (SAS) Report and in your school’s internal records. Once everything is in harmony and you have no more disbursements or returns to process, complete the School Balance Confirmation form on the Common Origination and Disbursement (COD) Web Site.

The Balance Confirmation form can be completed after the school has reconciled to a $0 balance both internally and externally. Once the school has completed their final reconciliation, the school should log in to the COD Web Site. From the School options menu click on the Balance Confirmation link on the left-hand side of the page and follow the instructions on the School Balance Confirmation screen.

To meet the closeout deadline, all records must be submitted to the COD System no later than 8:00 p.m. Eastern time (ET) on Friday, July 31, 2020 . After this deadline, Direct Loan records will not be accepted by the COD System and schools will no longer have Direct Loan funds available to draw down for the 2018-2019 Award Year. In other words, the Department of Education (the Department) will reduce the school’s Current Funding Level (CFL) to the greater of Net Drawdowns or Net Accepted & Posted Disbursements.

For more information check out the electronic announcement from FSA.


Secretary DeVos has directed all federal student loan servicers to grant an administrative forbearance to any borrower with a federally held loan who requests one. The forbearance will be in effect for a period of at least 60 days, beginning on March 13, 2020. To request this forbearance, borrowers should contact their loan servicer online or by phone. The Secretary has also authorized an automatic suspension of payments for any borrower more than 31 days delinquent as of March 13, 2020, or who becomes more than 31 days delinquent, essentially giving borrowers a safety net during the national emergency.


Federal Student Aid is getting ready to begin issuing Automatic Closed School Loan Discharge Liabilities to schools that have abruptly closed and displaced students. The rules for automatic closed school discharges were part of the 2016 Borrower Defense To Repayment regulations which ED implemented in December of 2018. Under those regulations FSA will determine which borrowers are eligible and grant discharge of their loans automatically. According to FSA, automatic discharges will be approved if a borrower was enrolled when a school closed or within 120 days of an institution closing, as long as the borrower did not enroll at another Title IV eligible school within three years.
These rules apply to all borrowers who obtained a federal title iv loan after November 1, 2013, including Direct Loan borrowers, PLUS Loan borrowers and Perkins Loan borrowers.



The Budget Control Act of 2011 was signed into law by President Barrack Obama to stop the federal government from going into default during the debt-ceiling crisis of 2011. Since then, every October 1st when the federal government begins its fiscal year, automatic spending cuts are imposed on federal appropriations to ensure that spending doesn’t exceed certain thresholds. This is known as “sequestration” or “the sequester” and it’s how the government has been keeping the federal budget in check. In the financial aid office, the sequester requires changes to Direct Loan fees, as well as Iraq-Afghanistan Service Grants and TEACH Grants which I’ve summarized for you below.

Direct Loan Program
The terms of the sequester increase the loan fees charged to Direct Loan borrowers for Direct Subsidized/Direct Unsubsidized and Direct PLUS loans from their statutory rates of 1 percent and 4 percent, respectively.
For loans where the first disbursement is made on or after October 1, 2017 and before October 1, 2018 –
• The loan fee for Direct Subsidized Loans and for Direct Unsubsidized Loans is 1.066%. For example, the fee on a $5,500 loan will be $58.63.
• The loan fee for Direct PLUS Loans (for both parent borrowers and graduate and professional student borrowers) is 4.264%. For example, the fee on a $10,000 PLUS Loan will be $426.40.

Iraq-Afghanistan Service Grants
An Iraq-Afghanistan Service Grant where the first disbursement is on or after October 1, 2017 and before October 1, 2018 requires a reduction of 6.6 percent from the award amount for which the student would otherwise have been eligible.

TEACH Grants
A TEACH Grant where the first disbursement is on or after October 1, 2017 and before October 1, 2018 requires a reduction of 6.6 percent from the award amount for which the student would otherwise have been eligible.

For more information including operational guidance, check out the two relevant Electronic Announcements from ED here and here.