It’s no secret that student loan debt in the U.S. is soaring. A quick internet search will return countless headlines noting the rising debt total—now over $1.6 trillion .
In search of a possible remedy, Public Service Loan Forgiveness (PSLF) was created in 2007 when Congress passed the College Cost Reduction and Access Act .
The program was developed to encourage graduates with federal student loans to pursue relatively low-paying jobs in public service, like teachers, nurses, or public interest lawyers, by helping them with their student loan debt—which may be higher than what their salary could allow them to repay.
At its core, the idea seems relatively simple. After 10 years of qualifying student loan payments while working in a qualified public service job, the remaining balance on a borrower’s student loans would be forgiven by the government.
But when the first batch of students became eligible for PSLF in 2017, 10 years after the program’s inception, it became clear that the guidelines were a little murkier than originally thought.
Nearly 99% of applicants were denied loan forgiveness. According to the Department of Education, 70% of the approximately 29,000 applicants that have been processed were denied because they failed to meet program requirements.
So, if you plan to pursue PSLF, it could be worth taking a few minutes to double check the program requirements and make sure you meet them all.
PSLF: The Requirements
In order to be considered for loan forgiveness, there are a few program requirements to meet. You can see all the requirements at the Federal Student Aid website , but here’s our high-level look.
Firstly, the borrower has to work for a qualifying employer—like a government agency or certain types of nonprofits.
They’d also have to work full-time. If they happen to be working a few jobs that all qualify for the program, it’s possible to work a cumulative total of 30 hours a week to meet the full-time employment qualification.
PSLF requires applicants to have a Direct Loan or a Direct Consolidation Loan and the loan cannot be in default. Also, 120 qualifying payments would have to be made on an income-driven repayment plan.
What Is a Qualifying Payment for Public Service Loan Forgiveness?
While it may seem easy to make qualifying payments for loan forgiveness, the process can be confusing at times and requires attention to detail from the borrower pursuing loan forgiveness.
Part of making PSLF qualifying payments is working for an employer who qualifies for the program. To confirm whether an employer qualifies, borrowers need to fill out the employment certification form. As borrowers work toward loan forgiveness in the program, they should fill out the employment certification form every year and every time they switch jobs.
If you’re considering applying to the program, double check the type of loans you hold and make sure they qualify for the program. To check, you can log into the Federal Student Aid website . For example, federal loans such as Perkins Loans or Family Federal Education Loans (FFEL) don’t qualify for PSLF.
However, if they are consolidated into a Direct Consolidation Loan, they may. Note that when loans are consolidated, any payments made prior to consolidation will not count toward the total of the 120 qualified payments required by the PSLF program.
You’ll also likely want to take a look at the repayment plan. In order to make a qualifying payment, the loan should be enrolled in a qualifying repayment plan, typically one of the income-driven repayment plans.
While the standard 10-year repayment plan does qualify for PSLF, by the time 120 payments have been made, the loan should be repaid, so there likely won’t be a balance left to forgive.
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Once program requirements are being met, making qualifying payments requires continued diligence. Qualifying payments must have been made after October 2007 , when the program started.
Payments should also be for the “full amount due as shown on your monthly bill” and should be made no later than 15 days after the payment due date. Many loan servicers offer the option to enroll in automatic payments, which could potentially make it easier to pay on-time every month.
Another thing to note is that payments only count toward PSLF if they are “required payments.” This means that any payments made while a borrower has in-school status, during the grace period, or during periods of nonpayment like deferment or forbearance, won’t count as a qualifying payment for the PSLF program.
A borrower will only receive credit for one payment per month . Making payments larger than the monthly minimum or making multiple payments a month doesn’t translate into reaching PSLF faster.
If a borrower pursuing PSLF plans to make an overpayment, it can be worth contacting the loan servicer to confirm the additional payment isn’t being applied to future payments.
A payment will only qualify toward PSLF if there is a payment due, so if a borrower has paid ahead, they may be unable to make a qualifying payment for that month.
For those volunteering with AmeriCorps or the Peace Corps , there are separate rules that make it possible for volunteers to use their Segal Education Award or Peace Corps transition payment toward their student loans.
In certain situations, volunteers in these programs are able to make a lump-sum payment that could count for as many as 12 PSLF qualifying payments.
Student loan qualifying payments don’t need to be made consecutively. For instance, if you had made a series of payments while employed with a qualifying employer, but then switch jobs and no longer work with a qualifying employer, you won’t lose credit for the PSLF qualifying payments you’ve already made.
After making 120 qualifying payments, borrowers can apply for loan forgiveness by filling out an application . After years of hard work, they’ll (hopefully) be able to celebrate the sweet victory of achieving student loan forgiveness.
Buyer Beware: Looking Out for Scams
There are a lot of boxes to check as you pursue loan forgiveness and it can be tricky to navigate the intricacies of the program. But, there is help out there.
The Department of Education offers an online help tool for borrowers pursuing PSLF. It can give borrowers and idea of where they stand and assist them through the process of pursuing PSLF.
An important note, there is no fee associated with filing paperwork for PSLF. If you’ve been contacted by a service that offers to provide assistance for a fee, they’re likely not affiliated with the Department of Education. In a worst case scenario, it could be one of the many scams that prey on confusion and have grown in number as student loan debt increases.
What If You Don’t Qualify for PSLF?
If pursuing loan forgiveness through PSLF isn’t an option for you, you can explore some alternatives to manage your student loans. One option available is student loan refinancing, which could give borrowers the ability to lower their interest rate or shorten their repayment term. Terms will vary based on personal financial situations.
Refinancing federal loans would eliminate eligibility for programs like PSLF, so it won’t be right for everyone. To see what refinancing could do for your student loans, take a look at SoFi’s student loan refinancing calculator.
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If you are looking to refinance federal student loans, please be aware that the White House has announced up to $20,000 of student loan forgiveness for Pell Grant recipients and $10,000 for qualifying borrowers whose student loans are federally held. Additionally, the federal student loan payment pause and interest holiday has been extended beyond December 31, 2022. Please carefully consider these changes before refinancing federally held loans with SoFi, since the amount or portion of your federal student debt that you refinance will no longer qualify for the federal loan payment suspension, interest waiver, or any other current or future benefits applicable to federal loans. If you qualify for federal student loan forgiveness and still wish to refinance, leave unrefinanced the amount you expect to be forgiven to receive your federal benefit.
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