A Guide to Public Service Loan Forgiveness

After graduating from college, one of your first responsibilities is figuring out how to pay off your student loans. If you work for the government or a non-profit organization, one option is Public Service Loan Forgiveness (PSLF).

For those who meet the minimum 10-year service agreement, PSLF can be an effective way to pay their student loans and eventually receive loan forgiveness.

Congress created PSLF in 2007 to attract people to public service fields. PSLF provides complete forgiveness of any outstanding loan balance after a borrower makes 120 on-time, qualifying payments — or essentially works full-time at a qualifying employer for 10 years.

When the first batch of borrowers reached their 10 years in 2017, many problems arose with the program. The Department of Education instituted big overhauls to the PSLF program, including a limited waiver opportunity for those who may have been misled or misinformed and are ineligible.

To qualify for PSLF, you’ll need to:

Your job title doesn’t matter, but your employer does. You must hold full-time status with a certified employer, including:

Jobs that could qualify for PSLF with a qualifying employer include, but aren’t limited to:

Working towards PSLF can feel daunting and overwhelming. Here are the steps you need to take to receive loan forgiveness.

Working in public service is not the only qualification. Your employer determines your loan forgiveness qualifications. You must work for a nonprofit 501(c)(3) or a government agency.

For-profits do not qualify for PSLF, even if you are in a public service field. For instance, you can be a public school teacher and qualify, but if you teach for a private, for-profit school, you will not qualify. You can check if your employer qualifies when filling out your PSLF forms.

Only Federal Direct Loans qualify for PSLF. Private loans are not eligible for this forgiveness program. However, there are options if you have any of the following federal loans:

The limited PSLF waiver opportunity allows students to apply for PSLF who may not have been eligible previously. The waiver ends on October 31, 2022.

If you have loans other than Federal Direct Loans, you must consolidate, or combine, your federal loans into a Direct Loan. When you consolidate your loans, with the limited PSLF waiver, if you have multiple payment counts, you can receive your highest payment count on all consolidated Direct Loans.

Subsidized or unsubsidized loans will consolidate your original loan. If you have any unqualifying loans that you wish to consolidate with your qualifying loan, you must do so under the limited PSLF waiver opportunity before October 31, 2022.

Income-driven repayment plans recalculate your student loan payment based on your income and family size. These plans may offer lower monthly payments than your original loan repayment plan. The four income-driven repayment plans offered are:

You can apply for an income-driven repayment plan through your online Federal Student Aid account.

You must make 120 on-time, qualifying student loan payments before applying for PSLF. You may only make one monthly payment each month for a total of 120 months. These months do not need to be consecutive.

The current COVID-19 student loan payment pause still qualifies towards the 120 payments even if you are not paying any money towards your loans. If your income-based repayment plan puts your payments at $0 a month, those months count towards your 120 payments as well.

The limited PSLF waiver opportunity may apply previously ineligible payments towards PSLF.

To apply for PSLF, you must complete an Employment Certification Form (ECF). You can now complete that form using the Help Tool. The Help Tool helps you generate your ECF based on your responses to the questions. If your employer is already in the system, submitting the form is easier.

Once your form is generated, you will download or print the form and have someone at your organization sign off on the information, verifying your employment. Typically, this is a person in human resources.

If you do not have someone to sign your form (for instance, if you are filling out employment for a former employer that no longer exists), you can submit your W-2s with your ECF. Completing this form at least once a year can help you tackle any issues that may arise and keep your payment count current.

After completing 120 verified PSLF payments through certified employers, you can apply for loan forgiveness by completing an ECF form and checking that you believe you are eligible for PSLF. Then, you wait for your paperwork to be processed. When you apply for forgiveness, you must still be employed full-time by a qualifying employer.

If you apply for PSLF and are denied, you can appeal the decision. You can begin the process through the Federal Student Aid website or by calling your PSLF provider. If you are still unable to make progress, you can always contact the Ombudsman Group for assistance.

If you have student loans that do not qualify for PSLF, or you do not wish to work at an eligible employer, there are other ways to pay off your student loans. However, with any opportunity, do your research to avoid student loan forgiveness scams.

You may be able to get a lower interest rate by refinancing your student loans. This can reduce your monthly payments and allow you to pay more towards your principal balance. Many private student loan companies offer refinancing options. You can apply without any commitment to see if you can get a better rate.

If you choose to refinance with a company, they will pay off your original loan, and you will have a new loan for that total through the new lender. Many companies allow you to apply online.

Grants are a form of financial aid that the borrower does not have to repay. Some grants have no stipulations, whereas others may require you to fulfill specific obligations.

Depending on your field of study, you may find several grant opportunities to help you pay off your student loans. Typically, you agree to work in a field for a specific amount of time in exchange for grants to pay off a set amount of your loans.

Common disciplines that offer subject-based grants include law, medicine, and education.

Companies realize that they may need to offer additional benefits and perks along with a competitive salary. A more common offering is company-sponsored student loan payment assistance. These companies offer to match up to a specific amount on employee student loan payments.

Not everyone qualifies for PSLF. People who work full-time at eligible employers while making 120 qualifying loan payments can qualify for PSLF. These borrowers must have specific loan types and be on a qualifying income-driven repayment plan.

Unlike some of the other forgiveness programs, PSLF forgives the remaining balance of your loans after you reach 120 eligible payments. Currently, there is no cap on the amount that can be forgiven through PSLF.

Since the Department of Education took a hard look at the PSLF program and created the limited waiver opportunity, more and more eligible public servants are receiving PSLF.

The likeliness depends on how well you have navigated the program requirements and documented your employment and loan repayment history. However, 10 years is a long commitment, and the program can change anytime.

If you hold the correct loans, are on an approved income-driven repayment plan, and are employed full-time by a qualifying employer, you should be able to receive PSLF after 120 verified payments.

In the beginning, many borrowers struggled with the program due to difficulty finding information. However, the newest updates to the program, like the Help Tool, have tried to ease the process for participants.

Ultimately, whether or not PSLF is a good idea is up to you. If you are passionate about working in a public service field and can make ends meet with a statistically lower-paying job, committing to 10 years may not be an issue.

If the thought of holding onto debt for 10 years scares you, PSLF may not be for you.

DISCLAIMER: The information provided on this website does not, and is not intended to, constitute professional financial advice; instead, all information, content, and materials available on this site are for general informational purposes only. Readers of this website should contact a professional advisor before making decisions about financial issues.