How Public Service Student Loan Forgiveness Works

If you are an American with a college degree, it’s likely that you took out student loans to pay for some or all of your tuition. Around 70% of all college students take out student loans to fund their education. Subsequently, the effects of carrying around a massive amount of student loan debt aren’t pretty. Many college grads struggle to make their student loan payments and are burdened from the stress of their hefty student loan debt. It’s no wonder student loan borrowers are looking for ways to cope with these loans. So, what if you could make your outstanding balance disappear through a loan forgiveness program?

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Public Service Loan Forgiveness (PSLF) is one route that federal student loan borrowers take in order to erase their student loan balance. To do this, you’ll need to work in a qualified public service profession and make 10 years’ worth of payments on an income-driven repayment plan. So, if you were already thinking about working in public service anyway, this could be the option for you. In this article, we will discuss eligibility requirements for PSLF as well as how the program works. 

How to qualify for Public Service Loan Forgiveness

At first glance, it might seem like the PSLF program is too good to be true, but there are a lot of eligibility requirements that you must have in order to qualify. It’s important to pay close attention to all of the requirements before filling out a PSLF application, so that you don’t waste time applying. 

Here’s what you have to do to qualify for PSLF:

  • Have loan(s) from the federal Direct Loan Program, OR consolidate. 
  • Lock down a full-time employment opportunity with a qualifying employer. 
  • Get on an income-driven repayment plan.
  • Make monthly payments on your student loan debt for a total of 10 years.
  • Fill out a PSLF application. 

Have loan(s) from the federal Direct Loan program OR consolidate 

Unfortunately for borrowers of private student loans, the PSLF program is only for those who have borrowed from the federal Direct Loan Program. If you have a private loan and are having trouble with loan repayment, contact your loan servicer and ask about your options. 

However, for those borrowers who have taken out loans from other types of federal student loan programs, there is still hope: you can consolidate these loans so that they become eligible. If you decide to consolidate your other federal student loans, such as the Federal Family Education Loan or Perkins loans, to make them PSLF-elgibile, you’ll want to do it as soon as possible. Whatever payments you make toward your loan balance won’t count once you consolidate. 

Lock down a full-time employment opportunity with a qualifying employer

The PSLF program was originally created as an incentive to encourage talent to work in public service professions such as teaching, firefighting, nursing, non-profit organizations and for certain government agencies. Your eligibility in the program has more to do with the employer you are working for and less about the actual position itself. For example, many teachers and nurses will qualify for the program for working in an underserved community. 

Here are some examples of qualifying employers:

  • Government agencies at any level. 
  • 501( c )(3) nonprofit organizations.
  • Nonprofit organizations without a 501 ( c )(3) status but have a primary mission to provide a qualifying public service.
  • Americorps or Peace Corps.

To provide proof that your employer qualifies for the program, you will need to submit an employment certification form to FedLoan Servicing, which is the contractor in charge of PSLF for the department. Once your employment certification form is processed, your loans will get moved over to FedLoan Servicing to be overseen there from that point on. 

It’s best to turn in a new employment certification form every year or any time that you get a new job. Although it’s not a requirement to submit this form annually, it’s strongly recommended that you do so you can keep track of your history with the program and continue down the right path. However, some people choose to wait until they are eligible to apply for the loan forgiveness program and then they go back and certify their employment after the fact. The choice is yours, but the key is to secure full time employment. This means that you will need to be working for your employer for a minimum of 30 hours per week. 

Get on an income-driven repayment

Switching to an income-driven repayment plan isn’t a requirement to qualify for PSLF, but it’s the choice that makes the most sense. To qualify for PSLF, you have to either be on the standard 10-year plan or an income-driven repayment plan. However, if you choose to make your qualifying payments while on a standard 10-year plan, you’ll have your loans paid off by the time you are eligible for forgiveness. Overall, you’ll get the most bang for your buck on an income-driven repayment plan. That way, your payments still qualify, but you’ll only be responsible for paying the bare minimum.

Make monthly payments on your student loan debt for a total of 10 years

In order to qualify for Public Service Student Loan Forgiveness, you will need to make a total of 120 qualifying, monthly student loan payments. 

So, here’s what constitutes a qualifying payment:

  • The payment must be for the full amount. 
  • The payments must have been made on time, within 15 days of the date that they are due.
  • On or after Oct. 1, 2007
  • You must be working full time for a qualifying employer during the timeframe that the payments are being made. 
  • You must be on a qualifying repayment plan. 

Keep in mind that each qualified payment must also be a required payment in order for it to count. In other words, extra payments will not count towards your eligibility requirements. 

Any payments made while you are attending school, granted a grace period, or when the loans are in forbearance or deferment will not count towards your eligibility requirements. 

The good news is that the payments don’t have to be consecutive in order for them to count. If at any time, you have to put a pause on your payments and go through forbearance, you can do so and pick back up where you left off. 

Going through job changes also will not have an effect on your eligibility as long as you are still working for a qualified employer.

Fill out a PSLF application

Once you meet all of the above requirements, you are all set to apply for PSLF. When you send in the application, be sure to also submit an employment certification form for your current employer as well as any other qualifying employers you may have worked for previously while making your 120 payments. 

If you had several different jobs or employers and were submitting the employment certification forms as you went, you will only need to send the one for your current employer. 

FedLoan servicing will make contact with you once they receive your application. During the time it takes for them to process your paperwork, you will not be required to make any loan repayments.