Managing Your Public Service Student Loan Forgiveness

By Kim Franke-Folstad. January 13, 2025 · 10 minute read

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Managing Your Public Service Student Loan Forgiveness

If you’re employed in the public sector or working for a nonprofit, and you have federal student loans to repay, you may be wondering if you can successfully navigate the Public Service Loan Forgiveness (PSLF) program.

Whether you’re just starting out on the PSLF path, or you’ve been working toward it for a few years and you’re getting closer to qualifying for forgiveness, it’s important to get the different stages of the process right.

Read on for information on how PSLF works, how to check PSLF progress, and ways to manage your progress moving forward.

Key Points

•   Only federal Direct loans, including Subsidized, Unsubsidized, and Direct PLUS loans for graduate students, qualify for PSLF.

•   Federal Family Education Loans, Parent PLUS, and Perkins loans must be consolidated into a Direct Consolidation Loan to qualify.

•   Eligible repayment plans for PSLF include income-driven repayment plans, such as IBR, PAYE, and ICR. The SAVE plan has been blocked in court and is on hold.

•   Track your PSLF progress regularly with the PSLF Help Tool. Use it to confirm employer eligibility and payments.

•   After 120 qualifying payments, submit the PSLF application form for forgiveness. But continue making payments until you receive PSLF approval.

Understanding PSLF Basics

The Public Service Loan Forgiveness (PSLF) program was created by the Department of Education (DOE) in 2007 to encourage college graduates to consider public service careers.

As an incentive, the program allows individuals who choose to work for the government, nonprofits, and qualifying religious organizations to apply for public service loan forgiveness. That means that after making 120 qualifying monthly loan payments, their remaining federal loan balance may be erased. Those working toward PSLF can use an income-driven repayment (IDR) plan to help lower the amount they owe on their student loans each month.

Another perk of PSLF: The leftover loan balance that’s forgiven isn’t subject to federal income taxes. So if you work in public service and you’re struggling with how to get out of student loan debt, the PSLF program may well be worth considering.

Eligibility Requirements for PSLF

PSLF applicants must meet several requirements to be eligible for forgiveness, including having the right types of loans and being on the right repayment plan.

Qualifying Loan Types

Only loans that are part of the federal Direct loan program, such as federal Direct Subsidized loans and federal Direct Unsubsidized loans are eligible for PSLF. Federal loans that are not Direct loans (such as Federal Family Education Loans (FFEL), Parent Plus loans, and Perkins loans) must be consolidated into a Direct Consolidation Loan to become eligible.

When it comes to undergraduate vs graduate student loans, only graduate loans that are part of the federal Direct program, such as Direct PLUS loans for graduate students, are eligible for PSLF.

Private student loans don’t qualify for federal forgiveness.

If you’re not sure what type of loans you have, log onto the Federal Student Aid (FSA) website StudentAid.gov. Click on the “My Loan Servicers Section” on your dashboard, and view the federal student loans in your name.

If your loans don’t qualify for PSLF, student loan refinancing is another option you may want to consider. When you refinance student loans, you replace your current loans with a new loan from a private lender. Ideally, the new loan will have a lower interest rate or more favorable terms, which could help make your payments more manageable. However, it’s important to be aware that refinancing federal loans makes them ineligible for federal benefits such as income-driven repayment and federal forgiveness plans.

Eligible Repayment Plans

To qualify for PSLF, you must make your monthly loan payments under an eligible income-driven repayment (IDR) plan or the standard 10-year-repayment plan. FSA advises using an IDR plan to repay your loans if you are working toward PSLF. Under these plans, your payments are based on your discretionary income and your family size, which can lower your payments.

Currently, the income-driven repayment options for federal Direct loans are the Income Based Repayment (IBR) plan, the Pay As You Earn (PAYE) plan, and the Income Contingent Repayment (ICR) plan. The Saving on a Valuable Education (SAVE) plan has been blocked in court and is on hold.

If you aren’t sure what loan repayment plan you’re on currently, you can check your FSA dashboard.

Qualifying Employment for PSLF

Another requirement for PSLF is that you work full-time — meaning at least 30 hours a week — for a qualifying employer. However, if you work part-time for two qualifying employers and your time averages out to at least 30 hours weekly, you may also be eligible.

Qualifying employers include:

•   Government organizations

•   501c3 nonprofit organizations

•   Nonprofit organizations that don’t have 501c3 status but whose primary purpose is to provide a qualifying public service

•   AmeriCorps or the Peace Corps

•   Religious organizations

You can use the Employer Search tool on the StudentAid.gov site to see if your employer qualifies. But you must submit a PSLF employment certification form — online or using a paper form — to confirm an employer’s eligibility status.

Make sure to submit a new employment certification form every time you change jobs to make sure your new employer qualifies. You may even want to do it annually. That way, your own records will remain up to date. And if you’re wondering where to find qualifying payments on your student loans, the number of qualifying PSLF payments you’ve made will be updated every time you file a new form, which can help you stay on top of your progress.

It’s important to note that the 120 monthly PSLF qualifying payments don’t have to be consecutive. For example, if you have a period of employment with a nonqualifying employer, you won’t lose the counts for prior qualifying payments. But you must be employed full-time by a qualifying employer when you apply for forgiveness.

Tracking Your Progress Toward Forgiveness

Managing your PSLF status has gotten a little easier in recent years, thanks to the PSLF Help Tool and other updates to the program.

The PSLF Help Tool helps make the StudentAid.gov site a one-stop shop for just about anything you might need to do while you’re working toward forgiveness, including checking your PSLF progress. You can use the site to:

•  Verify your employer’s PSLF eligibility status. As noted, you can do this by using the Employer Search tool. You’ll need your employer’s EIN (employer identification number) to search the database.

•  Submit a PSLF form to confirm your employer’s eligibility. You and your employer can use the PSLF Help Tool to digitally sign and submit the form.

•  Confirm your PSLF signatures using the Status Tracker. That way you can get credit for qualified PSLF payments. You can also use the site to email your employer a reminder to sign the form. If your employer is unable to digitally sign the form, you can manually upload the signed PDF.

•  Check the status of forms you’ve submitted. You can find out if there are any actions you must take to move the process along.

•  Review your qualified payment count. Make sure it’s been updated and that all your qualifying payments have been included.

Submitting the PSLF Application

Once you’ve made 120 payments and all other PSLF requirements have been met, you can request forgiveness of your remaining loan balance using the PSLF certification and application form.

You can use the PSLF Help Tool to digitally complete, sign, and submit your form. Or you can download a PDF of the form and manually sign and submit it.

After reviewing your application, the Department of Education will let you know if your request has been approved or denied. In the meantime, the FSA advises that you continue making payments on your loans, just in case there are any problems with your application. (Payments you make after your 120th qualifying payment will be refunded or applied to any other outstanding federal student loan debt you may have.)

Common PSLF Pitfalls and How to Avoid Them

The PSLF process takes years — think of it as a marathon, not a sprint. Here’s how to avoid some common mistakes along the way:

•  Don’t assume anything about the program will happen automatically. It’s up to you to make sure that you meet all the PSLF requirements and your paperwork is filed accurately and on time. If you have any questions, you can check the StudentAid.gov site and use the PSLF Help Tool to get the information you need. It may also be useful to set up news alerts for student loan forgiveness news updates so you’re always in the know about changes to the program.

•  Make sure your student loans are eligible for forgiveness and that you have the right repayment plan. Only federal Direct loans are eligible for PSLF. FFEL program loans and Federal Perkins loans don’t qualify unless they’ve been consolidated into a Direct Consolidation loan.

•  Certify your employment regularly. The employment certification form confirms that your employment is eligible for the PSLF program. It can also help you track how many qualifying payments you’ve made as you work toward the 120-payment threshold. That way, you can avoid any surprises when you apply for forgiveness.

•  Don’t make payments if your loan is in deferment or forbearance. You can only make a qualifying monthly loan payment during periods when you have a payment due. If you’re in loan deferment or forbearance (except under specific circumstances), payments are not due. But if you want to make qualifying payments, you can contact your federal student loan servicer to waive the deferment or forbearance.

•  Check out your other options. PSLF only makes sense if you have a remaining loan balance to erase after you’ve made 120 qualifying payments. If you aren’t sure whether that timeline makes sense for you, you can use the loan simulator at StudentAid.gov to get a personalized PSLF projection and compare it to other loan payment strategies.

Recommended: Removing Student Loans from Your Credit Report

Strategies to Maximize PSLF Benefits

Because student loan forgiveness is evolving and the rules can be complex, it can be challenging to make the most of all the benefits available. Here are two strategies that may help maximize PSLF.

•  Lowering income-driven loan payments by saving more for retirement. When you’re on an IDR plan, your monthly payments are based on your discretionary income each year. Contributing more to your employer’s retirement savings plan like a 401(k) could help reduce your taxable income and lower your payment. (You may want to discuss this strategy with a financial or tax professional to be sure it makes sense for you.)

•  Using other programs to boost your benefits. You don’t necessarily have to put all your eggs in the PSLF basket. There may be multiple student loan forgiveness programs you can use to help pay off your loans, based on the type of work you do and other factors. You might even be able to combine some of these benefits with PSLF.

The Takeaway

Working toward Public Service Loan Forgiveness can be a slow process, and at times, it may seem like more effort than it’s worth. But the program’s processes have improved over time, and if you qualify and you stick with it, PSLF can provide significant savings on your student debt.
If you don’t qualify for PSLF or you’re looking for other options to help manage your payments, you can explore IDR plans to see if one of them is right for you. You may also want to consider student loan refinancing if it could help you lower your monthly loan payments. Explore the different avenues available to see what works best for your situation.

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.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

What types of loans are eligible for PSLF?

Only loans that are part of the federal Direct loan program are eligible for PSLF. Private student loans don’t qualify for federal forgiveness. And federal loans that are not Direct loans, such as Federal Family Education Loan Program loans, Parent Plus loans, Perkins loans, must be consolidated to a Direct Consolidation Loan to become eligible.

How many payments do I need to make before qualifying for forgiveness?

You must make 120 qualifying payments (meaning using an eligible repayment plan such as an income-driven repayment plan and working for a qualifying employer) to successfully apply for Public Service Loan Forgiveness (PSLF).

Can I make lump-sum payments to reach forgiveness faster?

No. Waivers that temporarily allowed borrowers to make a lump-sum payment to reach forgiveness faster have expired.

What happens if I change jobs during the 10-year period?

It’s important to submit a PSLF employment certification form any time you change jobs. That way you can make sure your new employer is eligible.

Are there any tax implications when my loans are forgiven under PSLF?

The amount that’s eventually forgiven under the PSLF program is not subject to federal income taxes. However, you may have to pay state taxes. Check the tax rules in your state or consult a tax professional.


Photo credit: iStock/:Frazao Studio Latino

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