If you are employed by a government or a nonprofit, you might be able to get forgiveness for the remaining balance on your federal student loan through the Public Service Loan Forgiveness Program (PSLF).
Created by the Department of Education in 2007, PSLF is intended to help public-service professionals who may not earn large salaries and must struggle to repay their federal student loans. In this context, many teachers, firefighters, and social workers qualify.
The program has drawn frequent criticism for being hard to navigate and difficult to qualify for, charges that the Department of Education says it is addressing to make sure as many people as possible can access PSLF. In October 2023, the White House announced $5.2 billion in additional debt relief had been given to 53,000 borrowers under PSLF programs due to “reducing red tape and addressing past administrative failures.”
Many professionals are stressed out about their student loan debt and wondering if they qualify for forgiveness. Here’s the latest information on PSLF eligibility and student debt forgiveness.
What is Public Service Loan Forgiveness?
The PSLF program provides professionals a way out of their federal student loan debt by working full-time in public service. The remaining balance on your Direct Loans will be forgiven—meaning you will not have to pay it back–after you’ve made the equivalent of 120 qualifying monthly payments under an accepted repayment plan and while working full-time for an eligible employer.
What Are Public Service Loan Forgiveness Jobs?
The question for many people is who qualifies for PSLF? The jobs include teachers, firefighters, first-responders, nurses, military members, and doctors. But with this program, it is not only the type of job you have that determines if you can get forgiveness but also the type of employer. That is crucial. Qualifying employers include federal, state, local, tribal government and non-profit organizations.
To find out if your employer qualifies for PSLF, you can search through the Federal Student Aid search tool.
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Who Is Eligible for the Public Service Loan Forgiveness Program?
How does PSLF work? To qualify, borrowers must meet certain eligibility criteria. They include:
Work for a Qualified Employer
Part of PSLF eligibility requires working for a qualified government organization (municipal, state, federal, military, or tribal) or a qualified 501(c)(3) non-profit organization. Full-time AmeriCorps or Peace Corps volunteers are also eligible for PSLF. (Learn more about military student loan forgiveness.)
Some other types of non-profits also qualify, but not labor unions, political organizations, and most other non-profits that don’t qualify for 501(c)(3) status. Working for a government contractor doesn’t count; you have to work directly for the qualifying organization.
Only full-time workers are eligible — that is, workers who meet their employer’s definition of full-time or work a minimum of 30 hours per week. People employed at multiple qualifying organizations in a part-time capacity can be considered full-time as long as they’re working a combined 30 hours per week.
Note that time spent working in religious instruction or worship does not count toward meeting the full-time requirement.
Recommended: How To Get Out of Student Loan Debt
Having Eligible Loans
Eligible loans include Direct loans such as Stafford loans, PLUS loans (but not Parent PLUS loans), and Federal Direct Consolidation loans.
If you want to have your Federal Family Education Loan (FFEL) or Perkins loans forgiven, you’ll have to consolidate them into a Direct Consolidation Loan first. Any payments you made on the FFEL Program loans or Perkins Loans before you consolidated won’t count toward the necessary payments.
Private student loans are not eligible for Federal forgiveness programs.
Recommended: Student Loan Forgiveness Guide
Applying for Public Service Loan Forgiveness
There are a few hoops to jump through in order to pursue PSLF. To apply for the program, you’ll need to take the following steps:
1. Consolidate FFEL Program and Perkins Loans
Borrowers with FFEL Program and Perkins Loans must consolidate them with a Direct Consolidation Loan. This is necessary because if you consolidate your loans afterward, you won’t get credit for any qualifying payments you made on those loans. Already consolidated your Direct loans? Consider consolidating your Perkins Loans separately and start making new qualifying payments.
2. Sign Up for an Income-Driven Repayment Plan
There are several income-driven repayment plans to choose from.They are designed to make your student loan debt more manageable by giving you a monthly payment based on your income and family size.
The latest IDR program is called the Saving on a Valuable Education (SAVE) Plan. It lowers payments for almost all people compared to other IDR plans because your payments are based on a smaller portion of your adjusted gross income (AGI). Also, if you make your full monthly payment, but it is not enough to cover the accrued monthly interest, the government covers the rest of the interest that accrued that month.
Note: As a result of the CARES Act, months that you were in repayment while the requirement to make a payment was paused still count as qualifying payments if you also certify your employment for the same period of time.
3. Certify Your Employment
To do this, print out an Employment Certification form and get your employer to fill it out and send it in for approval. The Federal Student Aid website suggests filling this form out annually or at least every time you switch jobs.
You can also use the Public Service Loan Forgiveness Help Tool at StudentAid.gov/pslf/ to find qualifying employers and get the forms that you need.
4. Make 120 Qualifying Monthly Payments
You must make these payments while you’re employed by a qualified public service employer. Switching employers isn’t a problem, so long as you are still working for a qualifying organization.
5. Apply for Forgiveness
After you make the final payment, submit your application for forgiveness.
Current State of the Program
Because the program was created in 2007, the first borrowers to qualify for loan forgiveness applied in 2017. However, early estimates by the Government Accountability Office (GAO) reported the denial rate as more than 99%. At the same time, many borrowers weren’t even aware that the forgiveness program exists.
In 2022, the Biden Administration addressed these issues by introducing a “limited PSLF waiver,” which allowed student loan holders to receive credit for payments that previously didn’t qualify for PSLF. The waiver deadline expired on Oct. 31, 2022.
However, post-deadline, the effort to make it easier to qualify for PSLF is continuing. The DOE extended elements of the waiver through the IDR account adjustment program, which goes until the end of 2023.
President Biden announced in October 2023 that during his administration the DOE had secured relief for “almost $51 billion for 715,000 public servants through Public Service Loan Forgiveness (PSLF) programs, including the limited PSLF waiver and Temporary Expanded PSLF (TEPSLF).”
Beware of false communications from scammers posing as the DOE or your loan servicer. Read up on the latest student loan forgiveness scams.
Pros and Cons of the Public Service Loan Forgiveness Program
The advantages of the program are pretty straightforward. The disadvantages have more to do with how the program is executed in the real world.
Pros of PSLF
1. The balance of your student loans is forgiven after a set time. This works as a kind of bonus to make up for the low pay earned by people working in the public sector.
2. The amount forgiven usually isn’t considered income, so you aren’t taxed on it (and you don’t have to save additional money to account for the IRS bill). With other loan forgiveness programs, you might see a big tax bill.
3. Professionals in qualifying jobs are making a difference, and your government appreciates it enough to give you a break on your federal student loans.
4. You may pay less monthly because you’re on an income-driven plan. This means paying out less of your hard-earned cash every month.
Cons of PSLF
1. The program is only open to those with certain types of employers. And it’s contingent on staying with a qualifying public service employer for 10 years. With the SAVE program, qualifying loan holders may be able to pay off their federal student loans no matter who their employer is.
2. Some borrowers aren’t aware of the program, partly due to a lack of education by employers, loan servicers, and schools.
3. There are a lot of hoops to jump through to get your loans forgiven. Plus, if you don’t jump through a hoop properly, you can jeopardize your forgiveness.
4. The extra money that can potentially be earned from working for a corporate employer may help you pay off your loans sooner than through PSLF.
5. You might end up paying more in interest by making 120 payments than if you budgeted to aggressively repay your loans in less than 10 years.
Alternatives to the Public Service Loan Forgiveness Program
Another program available to some individuals is the Teacher Loan Forgiveness program. This program is available to full-time teachers who have completed five consecutive years of teaching in a low-income school. This program has strict eligibility requirements that must be met in order to receive forgiveness.
If you receive Teacher Loan Forgiveness, the five-year period of service that supported your eligibility will NOT count toward PSLF. However, the limited PSLF waiver discussed above temporarily waived this restriction for individuals who previously received Teacher Loan Forgiveness.
These federal forgiveness programs do not apply to private student loans. If you are looking for ways to reduce your interest rate or monthly payments on private student loans, refinancing with a private lender can be an option. (Note: You may pay more interest over the life of the loan if you refinance with an extended term.)
It is important to mention that refinancing your federal student loans with a private lender may make you ineligible for the Public Service Loan Forgiveness program, should you choose that route.
The Takeaway
The Public Service Loan Forgiveness program is one way for eligible borrowers to have their federal student loans forgiven. Recent changes to the program by the Biden Administration promises to make qualifying for PSLF easier. However, if you have student loans that aren’t eligible for PSLF, consider taking advantage of either refinancing or income-driven repayment.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.
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