A Guide to Public Service Loan Forgiveness
- The Education Department (ED) revealed it denied 99% of PSLF applications in 2018.
- The Government Accountability Office faulted the ED for denying so many applications.
- Opposition from the Trump administration casts doubt on the future of the PSLF program.
- While the future is uncertain, students who meet requirements can still receive PSLF.
PSLF News and Updates
In recent months, potential beneficiaries of the Public Service Loan Forgiveness (PSLF) program have found themselves on shaky ground. According to the U.S. Department of Education (ED), 99% of PSLF applicants were turned down in 2018 for not meeting program requirements or for providing incomplete information.
While Congress passed Temporary Expanded Public Service Loan Forgiveness (TEPSLF) to fix some of the application and eligibility issues plaguing the PSLF, so far the new program hasn't improved approval rates for America's public servants.
In fact, a September 2019 report by the Government Accountability Office (GAO) faulted the ED for turning down 99% of TEPSLF applicants to what was supposed to be a more inclusive program — the second time that percentage was rejected in under a year.
PSLF Program Applications as of March 2019
Total Number of PSLF Applications: 86,006
Approved Applications (Percentage): 1.1%
Recent events have also cast doubt on the future of the PSLF: Some ED officials have wavered in their commitment to the program, House Republicans proposed a bill to eliminate it, and President Trump wanted to cut the program from his 2020 budget.
If you are a college graduate who started a public service career with an explicit promise of federal student loan forgiveness, these are all unwelcome developments. However, there is still hope for public servants who were banking on having their student debt forgiven. Forbes even reports that over a million borrowers are still on track to receive the benefit.
With the right information and a little perseverance, you can still meet PSLF requirements and qualify for public service loan forgiveness.
Table of Contents and FAQ
Overview of Public Service Loan Forgiveness
The PSLF program was created under President George W. Bush in 2007 to attract college graduates into high-need fields like teaching and law enforcement. However, the rules for PSLF-qualifying jobs and loans are complex, and missteps in the application process can prove disastrous for applicants who would otherwise be eligible.
Misinformation from a federal loan servicer early in the program's implementation led many borrowers to enroll in repayment plans that were ineligible for forgiveness. Congress created TEPSLF in 2018 to fix this problem by providing "additional, limited conditions" under which borrowers could qualify, but the program's requirements are confusing and burdensome to applicants.
To be eligible for TEPSLF, applicants must first apply and be rejected for PSLF, a program for which TEPSLF applicants are, by definition, not eligible. GAO also reports that the ED and loan servicers are "not clear" about these unusual requirements, and that such steps in the application process are fundamentally at odds with the strategic goals of the PSLF program.
Public Service Loan Forgiveness Program Eligibility
Despite these roadblocks, many applicants who were denied the benefit may still qualify in the future. Aside from application errors, such as missing information, there are three reasons the vast majority of applicants were deemed ineligible in 2018: they made nonqualifying payments, they were enrolled in ineligible repayment plans, or there were employment certification issues.
Given the complexity of PSLF requirements, it's crucial to start the application process equipped with the right information. Below, we review the types of jobs that qualify for PSLF, eligible loans and repayment plans, and the basic steps for completing the PSLF application.
What Loans Qualify for Public Service Loan Forgiveness?
Only federal loans made under the William D. Ford Federal Direct Loan Program are eligible for public service loan forgiveness. Recipients of Federal Perkins Loans and Federal Family Education Loans are still eligible for forgiveness if they apply for a Federal Direct Consolidation Loan. Our PSLF Application Guide, below, reviews PSLF loan eligibility in more detail.
What Jobs Qualify for Public Service Loan Forgiveness?
To qualify for the PSLF program, borrowers must work full time in a qualifying public service job and make 120 on-time monthly payments. Applicants must submit the Employment Certification Form to the ED every time they switch employers to verify employer eligibility; however, it may be advisable to submit this paperwork every year, even if you don't change employers, to ensure you still qualify.
So what counts as a qualifying employer? According to the ED, public service jobs that qualify for student loan forgiveness fall into one of the following categories:
- Government organizations or agencies at the federal, state, local, or tribal levels
- Nonprofit organizations with 501(c)3 status
- Nonprofits without 501(c)3 status that provide certain public services
- AmericCorps or Peace Corps
In addition, the employer must not be a partisan political organization or labor union. Individuals who work at religiously affiliated social service organizations are eligible only if they perform at least 30 hours of nonreligious activities, which excludes functions like religious instruction, worship services, and other forms of proselytizing.
While the categories laid out above might seem broad, the ED sets narrow definitions for qualifying employers in the PSLF application. The organization must fall into one of the categories listed below.
Qualifying Public Service Jobs for Loan Forgiveness
- Early Childhood Education
- Public Interest Legal Services
- Emergency Management
- Public Library Services
- Law Enforcement
- Public Safety
- Military Service
- Public Education
- School Library Services
- Public Health
- Public Service for the Elderly or Individuals With Disabilities
- Other School-Based Services
Source: PSLF Application
Lastly, applicants to the PSLF program who work for a qualifying employer need to meet certain minimum employment requirements. The employee must have worked full time under each employer with an annual average of at least 30 hours per week or, alternatively, the number of hours per week considered full-time by the employer.
Apply for Student Loan Forgiveness for Public Service
Once you are enrolled in an eligible loan repayment plan, have made 120 on-time payments, and work for a qualifying employer, you can begin the PSLF application process. From start to finish, it takes 10 years of full-time public service to meet PSLF requirements. The guide below contains details about each step of the process, including your eligibility for the TEPSLF program if your PSLF application is denied.
- 1. Ensure you apply for (or are receiving) Federal Direct Loans
Students who received Federal Direct Loans are eligible for the PSLF program. These loans include the following:
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct Grad PLUS Loans
- Direct Parent PLUS Loans
- Direct Consolidation Loans
- Direct PLUS Consolidation Loans
- 2. If you received federal loans that are not Federal Direct Loans, consider loan consolidation
Some federal loans that are ineligible for PSLF can be consolidated into Federal Direct Loans to become eligible, including the discontinued Federal Perkins Loan and the Federal Family Education Loan.
You can apply for a Federal Direct Consolidation Loan on the Federal Student Aid website.
- 3. Complete the Employment Certification Form
You must complete the Employment Certification Form for every eligible employer. The form is normally submitted every time you change employers, but experts advise submitting this form annually to ensure you remain eligible.
- 4. Enroll in an income-driven repayment plan
Income-driven repayment plans fix monthly payments to your level of income, which is intended to make federal loans more affordable. Enrolling in one of these plans is mandatory if you want to qualify for the PSLF program. Income-driven repayment plans include the following:
- Revised Pay As You Earn Repayment Plan (REPAYE Plan)
- Pay As You Earn Repayment Plan (PAYE Plan)
- Income-Based Repayment Plan (IBR Plan)
- Income-Contingent Repayment Plan (ICR Plan)
- 5. Make 120 qualifying payments
The ED has a strict definition of a qualifying payment. All payments must be made:
- after Oct. 1, 2007;
- under a qualifying income-driven repayment plan (see step 4 above);
- in the full amount as shown on each bill;
- no later than 15 days after the due date; and
- while you are employed full time by a qualifying employer.
- 6. Apply for the Public Service Loan Forgiveness program
If you've met all the above requirements, you are ready to apply for the PSLF program. Submit the Public Service Loan Forgiveness application on the Federal Student Aid website. Note that you must be employed full time by a qualifying employer at the time you apply.
If you haven't submitted the Employment Certification Form for each of your previous employers, you need to do so. If you have already completed the form for previous employers, you only need to submit it for your current employer.
- 7. Apply for Temporary Expanded Public Service Loan Forgiveness, if applicable
If you have been denied for PSLF because you weren't enrolled in a qualifying repayment plan, you may qualify for forgiveness under TEPSLF. Successful applicants to this program have been enrolled in repayment plans not eligible for the original PSLF, including the following:
- Graduated Repayment Plan
- Extended Repayment Plan
- Consolidation Standard Repayment Plan
- Consolidation Graduated Repayment Plan
If you were enrolled in one of these plans, you must first apply for PSLF. Once you are denied for that program, you can send an email to FedLoan Servicing requesting that the ED reconsider your eligibility. You will then be contacted with details about the reevaluation process.
More details about TEPSLF can be found on the Federal Student Aid website.
The Future of the Public Service Loan Forgiveness Program
As worrisome as recent headlines may be to PSLF hopefuls, approval rates for the program are likely to increase over time as more applicants become eligible. However, the Trump administration and Republicans in Congress have taken clear steps to phase out the popular program, putting its future in jeopardy.
No matter what the future holds for the PSLF program, the ED is not operating in good faith to uphold its current obligations. As GAO reports, the ED is not sharing information effectively or ensuring a simple, seamless application process. More can be done to help America's public servants; in particular, the ED can implement GAO's recommendations to eliminate application errors that deny otherwise-eligible applicants loan forgiveness.
In the end, professionals like teachers, public defenders, and state social workers deserve better treatment from their government. Many public servants have banked on the promise of student loan forgiveness to enter highly demanding — and often poorly compensated — public sector professions. To continually deny applications for innocent missteps in the application process dishonors the sacrifice many professionals make to serve the public good.
Feature Image: mixetto / E+ / Getty Images