Public Service Loan Forgiveness

Angie Sodrel

| August 1st, 2022

Public Service Loan Forgiveness: What You Need To Know

There is a tremendous amount of outstanding student loan debt in the U.S., $1.762 trillion! Of that, $1.606 trillion, 91.2% is federal student loan debt. There are 43.4 million borrowers with federal student loan debt, and their average balance is $37,014.

There may be a way out if you can count yourself among those with outstanding federal student loan debt. We’ll explain what you need to know about Public Service Loan Forgiveness.

What is Public Service Loan Forgiveness?

The federal government created the Public Service Loan Forgiveness (PSLF) program in 2007. The program provides incentive/relief for people to enter into careers in fields that, while vital to the public, are often not very well paid and to relieve some debt burden for those already working in those fields.

Careers Eligible for PSLF

Some careers that qualify for PSLF include the military, law enforcement, education, healthcare, firefighters, and first responders. The job you hold is less important when it comes to being eligible for PSLF than the employer you work for. Qualifying employers include:

  • The government at the local, state, or federal level
  • Organizations with 501(c)(3) non-profit status
  • Non-profit organizations not designated as 501(c)(3)s but that provide a qualifying public service as their primary purpose
  • AmeriCorps and the Peace Corps
  • Religious organizations

If you’re uncertain if you’re employer qualifies, you can use this tool to search.

Requirements for PSLF

PSLF will forgive the remaining balance on Direct Federal Loans once the borrower has made 120 qualifying monthly payments while working full-time or at least 30 hours per week for a qualified employer.

A qualifying monthly payment was made:

  • After October 1, 2007
  • Under a qualified repayment plan
  • For the full amount on the bill
  • No more than 15 days after the due date
  • While working full-time for a qualified employer

Any loan taken out under the William D. Ford Direct Loan (Direct Loan) Program qualifies for PSLF. Loans from the following federal student loans program don’t qualify for PSLF:

  • Federal Family Education Loan (FEEL)
  • Federal Perkins Loan

If you have these types of loans, they may become eligible for PSLF when consolidated into a Direct Consolidation Loan. Private student loans do not qualify for PSLF.

Because of the pandemic, the PSLF program has made some temporary changes. Some federal student loans were given forbearance and require no payments through August 2022. And the Department of Education issued a limited waiver through October 2022 for some of the PSLF qualifications.

Those who apply for PSLF whose loans are in forbearance can still skip payments until September 2022. As long as your employment still qualifies you, the months your loan was in forbearance will count towards the total of the 120 payments PSLF requires.

Prior to the pandemic, if you consolidated your non-qualifying loans into a Direct Consolidation Loan, only the payments made to the new loan would count towards the 120 required for PSLF.

Under the waiver, if you consolidate FEEL or Perkins Loans before October 31, 2022, you may be allowed to count those prior payments toward the 120 PSLF qualifying payments. Also, under the waiver, the following repayment plans may be eligible for PSLF:

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Graduate PLUS Loans

Applying for PSLF

If you’ve met the requirements, submit the PSLF application. You’ll need to include an employment certification form for your current employer and any previous qualifying employers you worked for while making the 120 payments if you haven’t been sending those forms in already.

You’ll be notified once the paperwork is received, and you are not required to make payments while your application is processed. You’ll be notified if your application was approved or denied. The process can take a few months. If you need to submit additional information, it can take longer.

Additional Forgiveness Programs

If you don’t qualify for PSLF, there are several other federal student loan forgiveness programs that may apply to you.

While private student loans are not eligible for federal forgiveness programs, you may be able to consolidate those loans for a lower interest rate than you’re currently paying, which can save you money.

By Angie Sodrel

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