A Guide to Public Service Loan Forgiveness

Federal student loan debt may seem like an insurmountable obstacle for many recent graduates after earning a degree. However, the Public Service Loan Forgiveness (PSLF) program can help you manage that debt so that it doesn’t feel like you’re drowning.

PSLF incentivises college graduates to work in public service industries. After making loan payments for 10 years while working for an eligible employer, you can qualify for complete federal student loan forgiveness.

Yes, you read that correctly. Whether you owe just $1 or $1 million, you can qualify for complete loan forgiveness.

The PSLF program rewards people working in public service industries by offering federal student loan forgiveness after approximately 10 years.

While simple in theory, the program is more complex in practice.

There are strict limitations on where you can be employed to benefit from PSLF, and the program has historically had high denial rates until recently. It’s also not enough to just work in a public service industry for 10 years; you must also remain current on your loans for that time period to see your loans discharged.

In short, you’ll need to check the following boxes to qualify for PSLF:

Only your employer matters when it comes to qualifying for PSLF.

Your actual job title is of no importance to the Department of Education (ED) in determining your eligibility. As long as the entity signing your paychecks meets the criteria, you’ll eventually qualify for loan forgiveness.

The following are eligible employers:

According to ED, not-for-profit organizations not exempt under section 501(c)(3) can still be considered a qualifying employer if they devote a majority of full-time employees to working in at least one of the following areas:

Federal Student Aid (FSA) provides an employer search tool to confirm whether an employer would qualify under PSLF.

It’s worth noting that you must work at a U.S.-based employer. You won’t qualify if you work for a foreign government or an international organization like the United Nations.

You must work at a qualifying nonprofit organization or government agency to qualify for PSLF.

For-profit organizations don’t count for purposes of PSLF. For example, a teacher at a public school would qualify, while a teacher at a for-profit, private school would not qualify.

It’s worth remembering that you must also be a full-time employee. You must work an average of 30 hours per week at the qualifying employer. And if you are a teacher who works at least eight months of the year, you still qualify as a full-time employee for the entire calendar year.

Only loans received under the Federal Direct Loan Program qualify under PSLF.

That means loans distributed under the Federal Family Education Loan (FFEL) or Federal Perkins Loan (Perkins Loan) programs won’t qualify. Additionally, private student loans don’t qualify.

You can, however, consolidate FFEL or Perkins loans into a Direct Consolidation Loan. This essentially combines the loans into a Direct loan, thus making it eligible for PSLF.

You must be enrolled in either the 10-year standard repayment plan or one of the available income-driven repayment (IDR) plans.

For most borrowers, it makes sense to instead enroll in an IDR plan. PSLF grants forgiveness after 10 years of repayment, so you won’t see this benefit if you are in the standard repayment plan, as this plan will have you pay off your loans within 10 years anyway.

There are currently three available IDR plans:

Not all borrowers qualify for every IDR plan. FSA’s loan simulator can help you choose the IDR plan that makes the most sense for you.

To qualify for loan forgiveness under PSLF, you must make a total of 120 student loan payments while working full time at a qualifying employer.

This means you must pay the full amount on your monthly bill. Under IDR plans, this is calculated based on your income, and monthly payments can be as low as $0.

Months spent under certain deferment or forbearance programs may also count toward the 120 payments. Those deferment or forbearance types include:

ED recommends that you submit a PSLF form each year or whenever you change employers.

This ensures that your time employed and making payments is counted toward the timeline to forgiveness. Otherwise, you may apply for forgiveness after 10 years only to learn that your employer doesn’t meet the PSLF requirements.

Your employer must also confirm your status as an employee during this step in the process. According to FSA, this will often be someone working in the human resources department or your direct supervisor.

You’ll need to submit one last PSLF application once you reach 120 qualifying payments.

This involves filling in the details on the official PSLF form.

Someone working at your employer will also need to contribute to the form. The department will send the employer an email from DocuSign to certify your employment.

Once approved, ED will alert you that your remaining debt balance has been forgiven. This includes all outstanding interest and principal. If you made payments after the 120th qualifying payment, ED will refund that money to you or apply it to any other outstanding student loan debt.

Perhaps ED did not count a period of time that you believe should have been included in your PSLF application.

You can submit a request for PSLF reconsideration to the department if you disagree with ED’s payment count. This is a chance to submit additional documentation that may help your case and increase your qualifying payments count.

You must submit your PSLF reconsideration request within 90 days of when your loan servicer sent the payment count you disagree with.

Congress created the Public Service Loan Forgiveness program through the College Cost Reduction and Access Act of 2007. Former President George W. Bush signed the proposal into law on Sept. 27, 2007.

The bill enjoyed wide bipartisan support at the time of its passage. In the House of Representatives, all voting Democrats voted in favor of the bill and were joined by 77 Republicans.

It ultimately passed the House 292 votes to 97.

Due to the 10-year lead time, borrowers didn’t become eligible for loan forgiveness under PSLF until 2017.

Very few borrowers received forgiveness early on.

A Government Accountability Office report in 2018 found that in the first eight months of eligibility, 19,321 borrowers submitted a loan forgiveness application. ED approved just 55 of those applications.

Typically, borrowers were turned away because they were under the wrong loan program or were enrolled in the wrong repayment plan.

The Biden administration changed the rules surrounding PSLF for a limited time to help more borrowers qualify for PSLF loan forgiveness.

Under the waiver, past payments that previously didn’t count toward the 120 payments thresholds could be counted. This includes payments made under an ineligible repayment plan or made toward non-Direct Loan program loans. Borrowers did, however, have to consolidate into the Direct Loan program by a set deadline to qualify.

President Joe Biden’s administration used negotiated rulemaking to amend who could qualify under PSLF.

The final rule, issued Nov. 1, made a number of changes to the program. It expanded what counts as an eligible monthly payment to include some deferment types and added new professions to what would qualify as an eligible employer.

It also attempted to make the PSLF approval process easier for borrowers.

Shortly after taking office, President Donald Trump proposed limiting which organizations can qualify as an eligible employer under PSLF.

He directed ED to revise PSLF to exclude organizations that serve a “substantial illegal purpose.” Trump’s proposal pointed toward practices that fall in line with culture war topics he had highlighted during his campaign, including immigration, transgender issues, and public protests.

The next month, ED announced its intention to form a negotiated rulemaking committee to amend PSLF.