Public Service Loan Forgiveness (PSLF) is a federal program designed to forgive the remaining balance on Direct Loans after borrowers make 120 qualifying monthly payments while working full-time for an eligible employer. To qualify, you must be on an income-driven repayment (IDR) plan and employed by a qualifying organization, such as a U.S. government entity (federal, state, local, or tribal) or a non-profit organization with 501(c)(3) status from the IRS.

If you’re eligible for PSLF, you could save hundreds or even thousands of dollars on your student loans, making it worthwhile to determine your eligibility.

How PSLF works

To work toward Public Service Loan Forgiveness (PSLF), borrowers must meet all program requirements from the beginning. To ensure you’re on the right path, the U.S. Department of Education recommends completing the PSLF and Temporary Expanded PSLF (TEPSLF) Certification and Application (PSLF Form) annually or whenever you change employers. This form, available on the Department of Education’s website, is used to verify if your payments qualify for PSLF.

The Department will review the information provided to determine if your payments count toward PSLF. If your payments don’t qualify, you’ll need to take corrective actions to align with PSLF requirements.

Once you are eligible for PSLF and have made 120 qualifying payments, any remaining loan balance will be forgiven. Additionally, you won’t owe income taxes on the forgiven amount.

Why PSLF can be beneficial for borrowers

If you have significant student loan debt, Public Service Loan Forgiveness (PSLF) could save you tens of thousands of dollars and potentially shorten your repayment timeline by years or even decades.

However, if you don’t meet the career requirements for PSLF, you can still benefit from an income-driven repayment (IDR) plan. This plan adjusts your monthly payments based on your income and family size. While it may not offer the same forgiveness timeline as PSLF, it provides a way to manage payments for 20 to 25 years before your loans are forgiven.

How to qualify for Public Service Loan Forgiveness

Before your loans are forgiven, make sure you qualify for Public Service Loan Forgiveness (PSLF). To be eligible, you must work full-time for a qualifying employer, have Direct Loans under an income-driven repayment plan, and make 120 qualifying payments.

Employment

Qualifying employment for Public Service Loan Forgiveness (PSLF) includes working for U.S. government agencies at the federal, state, local, or tribal levels, or for 501(c)(3) nonprofit organizations. Additionally, volunteering with AmeriCorps or the Peace Corps counts towards qualifying employment.

Employers that do not qualify include:

  • For-profit organizations, even if they are government contractors.
  • Partisan political groups and organizations.
  • Labor unions.

To qualify, you must work either full-time or at least 30 hours per week, whichever is greater. If you have multiple part-time jobs with qualifying employers, you can meet the requirement as long as your combined hours average at least 30 per week.

Qualifying loans

For Public Service Loan Forgiveness (PSLF), only federal Direct Loans are eligible. Federal Family Education Loans (FFEL) and Federal Perkins Loans do not qualify on their own. However, you can make FFEL and Perkins Loans eligible by consolidating them into a Direct Consolidation Loan. Private student loans are not eligible for PSLF.

Eligible for PSLF:

  • Direct Loans
  • Direct Consolidation Loans

Not Eligible for PSLF:

  • Private student loans
  • Federal Family Education Loans (FFEL)
  • Federal Perkins Loans

Qualifying payments

To qualify for Public Service Loan Forgiveness (PSLF), you must make at least 120 qualifying payments on your student loans. These payments should typically be made under an income-driven repayment (IDR) plan, which adjusts your monthly payment based on your income.

The Biden administration has temporarily allowed payments made on Perkins Loans and FFEL Loans to count toward PSLF, provided you consolidate these loans into a Direct Consolidation Loan by June 30, 2024.

The four main IDR plans are:

  • Revised Pay As You Earn Repayment Plan (REPAYE)
  • Pay As You Earn Repayment Plan (PAYE)
  • Income-Based Repayment Plan (IBR)
  • Income-Contingent Repayment Plan (ICR)

Payments do not need to be consecutive to count toward PSLF. If you switch from a qualifying employer to a nonqualifying job, you will still receive credit for the payments made while employed with a qualifying employer. You can resume your progress if you later return to a qualifying employer.

To be considered a qualifying payment, it must:

  • Be made after October 1, 2007.
  • Cover at least the full amount due on your monthly bill.
  • Be made on time (or no more than 15 days after the due date).
  • Be made while you are employed full-time with a qualifying employer.

Payments made while you are in school, during a grace period, or during deferment or forbearance do not count toward PSLF. Additionally, making larger payments will not expedite your eligibility for PSLF.

How to apply for PSLF

To apply for Public Service Loan Forgiveness (PSLF), you need to complete the PSLF application. While you can submit this application after making 120 qualifying payments, the Department of Education recommends submitting it periodically while you’re working toward PSLF to ensure your employer certification is up to date.

Continue making payments while your application is being processed. If your application is approved after you’ve made the 120 payments and you’ve overpaid, you’ll receive a refund for the qualifying payments.

You should also submit the form annually or whenever you switch employers to confirm that you remain on track for forgiveness. You can start the PSLF form online or download a paper version to complete by hand. In either case, your employer must provide verification.

If your application is approved, you will be notified that the remaining balance on your student loans, including principal and interest, has been forgiven.

If your application is denied, you will receive a notification explaining the reason. Common reasons for denial include working for a non-qualifying employer or failing to make qualifying payments.

How to avoid mistakes when applying for PSLF

PSLF is a valuable loan forgiveness program for those who can meet its requirements. However, many applicants in the past were not approved for forgiveness, prompting the introduction of a temporary waiver.

Common reasons for rejection included ineligible payments, incomplete application information, or loans that did not qualify from the start.

To enhance your chances of approval, submit the PSLF and Temporary Expanded PSLF Certification & Application (PSLF Form) annually and whenever you change employers. This form helps verify that your payments are being counted toward PSLF. Ensure that you include all required details about your employer, including the Employer Identification Number (EIN).

Additionally, maintain consistent application information and employment records from year to year. Keeping a reliable track record of on-time payments through a qualifying repayment plan is also crucial.

In Conclusion

Public Service Loan Forgiveness (PSLF) can be a valuable opportunity for public service workers seeking to have some of their student loans forgiven. While not everyone qualifies, you can submit a PSLF form annually to check if you’re on track for forgiveness. If you’re not eligible, there are other federal forgiveness programs and repayment options you might consider.