Public Service Loan Forgiveness
Public Service Loan Forgiveness, commonly referred to as “PSLF,” is a government program that forgives the balance on your loans after meeting certain qualifications. This article will outline the program and how to apply.
The PSLF program was started to help public service workers receive forgiveness on their loans. While it may seem simple, the program is historically complicated, and many borrowers have been denied in the past. But, the Department of Education has been making updates to the PSLF program to now allow more borrowers to be eligible for forgiveness and to receive forgiveness sooner!
Who Qualifies for PSLF:
To qualify for PSLF, you must meet all of the following criteria:
- Currently Work at a U.S. federal, state, local, or tribal government and/or not-for-profit organization (federal service includes U.S. military service)
- Currently Work full-time for that organization
- Have Direct Loans (or have consolidated other federal loans into a Direct Loan)
- Repay your loans under an income-driven repayment plan
- Make 120 qualifying payments while working for a qualifying employer
Qualifying Employer:
A qualifying employer for PSLF includes any U.S. federal, state, local, or tribal government or not-for-profit organization. For example, if you are (or used to be!) a teacher, an administrative assistant at a 501c3, a nurse, or a university employee, you’re likely eligible.
PSLF will take into account all previous and current jobs at a qualifying employer from 2007-present.
Working Full-Time:
Your employer ultimately decides the definition of what it means to be full-time, but most employers define it as 30 hours per week.
You can also be part-time at two qualifying employers and be considered full-time if you work an average 30 hours per week between the two employers. For example, Jane is an x-ray technician at Hospital A for 20 hours per week. She also is an x-ray technician at Hospital B for 15 hours per week. Because she works at Hospitals A and B for over 30 hours per week, she is eligible for PSLF.
Qualifying Loans:
Any loan received under the William D. Ford Federal Direct Loan (Direct Loan) Program qualifies for PSLF. This includes loans like Direct Subsidized or Direct Unsubsidized.
If you have a loan from the Federal Family Education Loan (FFEL) Program and/or the Federal Perkins Loan (Perkins Loan) Program, they are not eligible for PSLF, but they may become eligible if you consolidate them into a Direct Consolidation Loan. To learn more about consolidation, click here. This includes loans like FFEL Subsidized or FFEL Unsubsidized.
PLUS loans like Parent PLUS Loans and Grad PLUS Loans are tricky. Grad PLUS Loans are eligible for PSLF, but Parent PLUS Loans are not, unless they are consolidated into a Direct Loan. However, if you consolidate your Parent PLUS Loan into a Direct Loan, your payment count (towards the 120 payments needed for PSLF) will start at 0 payments.
Private Loans are non-Federal loans, made by a lender such as a bank, credit union, state agency, or a school. If you have private loans, you may have refinanced your loan or co-signed with someone else, and they may be held by Wells Fargo, SoFi, or Discover. Private Loans are not eligible for any loan forgiveness program. Once Federal Loans are turned Private, there is no way to make them Federal again.
If you’re not sure what types of loans you have, log in to StudentAid.gov using your FSA ID (account username and password) and select "My Aid” under your name. My Aid displays information on all federal loan and grant amounts, outstanding balances, loan statuses, and disbursements.
To continue with our example, let’s say Jane has three different loans. A Direct Unsubsidized Loan from her education, a Parent PLUS Loan that she took out for her child, and a Private Loan from grad school. Currently, only her Direct Unsubsidized Loan is eligible for PSLF. Jane can also choose to consolidate her Parent PLUS Loan to make it eligible for PSLF, but the payment count will start at zero.
Qualifying Repayment Plans:
To qualify for PSLF, you must be on an Income-Driven Repayment Plan (commonly referred to as an IDR). There are currently three different types of Income-Driven Repayment Plans:
- Pay As You Earn Repayment Plan (PAYE Plan)
- Income-Based Repayment Plan (IBR Plan)
- Income-Contingent Repayment Plan (ICR Plan)
Income-Driven Repayment Plans formulate your monthly student loan payment based on your income, rather than your loan balance. For some people, your Income-Driven Repayment amount may even be $0 per month. However, some payments may increase under these plans if your income is too high.
To learn more about Income-Driven Repayment Plans, click here.
Going back to our example, since Jane has a Direct Loan and consolidated her Parent PLUS Loan into a Direct Loan, she enrolls in an Income-Driven Repayment Plan. Due to her income, she qualifies for a $0 payment. Even though she is currently paying $0 per month, she is receiving credit towards PSLF. If Jane’s income increases next year, she may no longer pay $0 per month.
120 Payments:
To receive forgiveness on the remaining balance of your loan(s), you must make 120 qualifying payments towards your loans.
Student loan payments count towards the 120 payments needed for PSLF if all of the following qualifications are met:
- Under a qualifying repayment plan (IDR)
- For the full amount due as shown on your bill
- No later than 15 days after your due date
- While you are employed full-time by a qualifying employer
You can’t make qualifying payments while you are still in school, are in deferment, or in forbearance.
Your payments do not need to be consecutive, but if they are, it will take you about 10 years to receive forgiveness. Additionally, you cannot make more than one payment per month or pay a higher amount to receive PSLF sooner.
To continue with our example, Jane has worked as an x-ray technician since 2019, is on an Income-Contingent Repayment Plan, and has never made a late payment. She has 48 payments towards the 120 needed for PSLF.
How to Apply for PSLF:
To receive loan forgiveness, you need to show “proof” that you meet all the qualifications. This is done through an Employer Certification Form, also known as an ECF, or a PSLF Form.
You will need to submit this form for each qualifying employer that you work at. For some, this may be 1-2 forms, but for others, this can mean 5-10+.
It is recommended that you submit a PSLF Form for each employer annually, so you have an annual snapshot of how close you are to receiving forgiveness.
On the form, you will fill out personal information (name, address, social security number). Your employer(s) will add their information (name, address, Federal Employer Identification Number also known as an FEIN number) and the period(s) you worked at that employer and the average hours worked.
Once completed, this form is submitted to Federal Student Aid. They will review your form and send you a letter or email with an updated payment count.
To conclude our example, Jane submits an Employer Certification Form to Federal Student Aid for Hospital A, Hospital B, and the non-profit she used to work at. Federal Student Aid reviewed her application and sent her a letter via mail with her updated payment counts. Jane is closer to receiving forgiveness than she realized!
How Savi can Help:
Savi is working with AARP Foundation to help older adults take control of their student debt. If you have student loans, you can either sign up for Savi or log in to your account if you’ve already created one.
Savi helps borrowers through every step of the PSLF process. With Savi you can:
- Check to see if your current or past employers are eligible for PSLF
- See if you can lower your monthly payment by enrolling on an Income-Driven Repayment Plan
- Have your PSLF Employer Certification Form digitized and submitted to your employer(s) by Savi
- Receive 1:1 support from our team on any questions you may have