Public Service Loan Forgiveness: Do You Qualify?

One of the most popular student loan programs is Public Service Loan Forgiveness (PSLF). The program promises big rewards for student loan holders by completely wiping away their remaining student loan debt.

But understanding the PSLF application requirements can be confusing. Additionally, there are lingering questions about how long the program will remain intact. Before pursuing Public Service Loan Forgiveness, ask yourself if PSLF makes sense for your financial situation.

Here’s what you need to know about qualifying for Public Service Loan Forgiveness and whether it’s a smart move for you.

What is Public Service Loan Forgiveness?

Public Service Loan Forgiveness (PSLF) is a federal program designed to forgive student loan debt for employees of certain public and nonprofit jobs. It erases whatever remains of your federal student loans after you’ve made 120 qualifying payments while working for an eligible organization.

For most borrowers, you’ll need to work for 10 years before receiving loan forgiveness from PSLF. Of course, after 10 years of repayment, your loan balance might be much smaller than when you started. But if you owe a lot in student loans, PSLF could offer significant financial relief.

You must meet the program’s requirements every year to receive loan forgiveness. Unfortunately, some borrowers have counted on PSLF only to discover — 10 years later — that they didn’t meet all the criteria. Make sure you understand the specific qualifications to ensure you’re on track for Public Service Loan Forgiveness.

Source: Department of Education data as of Dec. 2, 2022

*Note: The PSLF approval rate is expected to rise significantly due to recent changes making it easier to qualify, including by allowing a wider range of eligible payment plans to take part.

It’s crucial to pay attention to policy changes to ensure the program remains intact since there have also been discussions of eliminating PSLF. Although current applicants might (hopefully) still be considered eligible even if the program were to disappear, there’s no guarantee it will be around forever.

If you’re interested in influencing policy, contact your elected representatives to tell them how you feel about PSLF.

What are some Public Service Loan Forgiveness jobs?

Although people ask about Public Service Loan Forgiveness jobs, the more important question is about Public Service Loan Forgiveness employers. The PSLF program is available to employees of:

• Federal, state, local or tribal government organizations
• A 501(c)(3) nonprofit
• A not-for-profit that’s not 501(c)(3)-designated but meets other requirements related to public service
• AmeriCorps (in a full-time capacity) or the Peace Corps

Your specific job typically doesn’t matter, just so long as the organization or agency falls into one of the above categories. However, if you perform work of a religious nature as part of your job at a qualifying organization, that does not count toward the total hours. (For example, the Department of Education notes that “time spent on religious instruction, worship services or any form of proselytizing” may not be eligible.)

In addition, you don’t need to work for the same employer during the entire 120-month period. However, you must work the number of hours your employer considers full-time work or an average of at least 30 hours per week each year, whichever is greater.

Public Service Loan Forgiveness qualifications: Which student loans are eligible?

Loan eligibility is another area where you’ll have to be careful. Not all federal student loans qualify, so be sure that yours meet the requirements.

*Note: Your loans could become eligible if combined into a new direct consolidation loan. However, be sure to speak with a student loan servicer first to make sure a new direct consolidation loan won’t “reset the clock” and wipe away earlier qualifying payments.

To be eligible, loans must originate from the direct loan program. Therefore, Perkins loans and Federal Family Education Loans (FFEL) do not qualify for forgiveness. However, these loans might be eligible for other loan forgiveness programs, such as the Perkins loan cancellation.

What are the requirements for eligible payments?

Usually, your loans must be on an eligible repayment plan to qualify for Public Service Loan Forgiveness. Keep in mind this doesn’t apply while the PSLF limited waiver opportunity is in effect.

The payment plans that qualify are:

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

Note that the standard repayment plan technically qualifies as well, but since this plan only spans 10 years, you wouldn’t have any balance left to forgive after 120 qualifying monthly payments. As a result, you may need to switch to an income-driven plan to get forgiveness from PSLF.

No matter which plan you choose, you’ll need to have made 120 full, on-time monthly payments to qualify. Additionally, only payments made after Oct. 1, 2007, count as qualifying payments.

Making lump payments for PSLF

The Department of Education used to treat lump-sum payments as one payment but now allows extra payments to count toward the 120-payment criteria. For example, if your monthly payment is $100 a month and you pay a lump sum of $1,200, the following 12 payments are covered.

How can you ensure you qualify for Public Service Loan Forgiveness?

Since this program began in 2007, the first cohort was evaluated for PSLF in 2017. Unfortunately, some borrowers learned too late that they weren’t eligible for forgiveness.

To make sure you don’t find yourself in this situation, here are some critical steps to take:

1. Complete certification forms

The Employment Certification for Public Service Loan Forgiveness form should be filled out annually (or whenever you change jobs). Your employer will need to fill out part of the form in order to verify your employment is eligible under the program. While submitting it on an annual basis isn’t a requirement, it could be helpful for your servicer to track your eligibility.

2. Get answers to your PSLF questions

If you or your employer is unsure about any aspect of the program, consult this Consumer Financial Protection Bureau guide for answers to your questions. The Department of Education’s PSLF help tool can also help confirm your eligibility and timing.

3. Have your paperwork ready to go

You’ll need to work at a qualifying organization when you submit your PSLF application. In addition, you’ll have to submit everything at once — your whole 10-year employment history. Having filled out the employment form and tracked your payments each year can help the Department of Education make a decision faster.

Make sure to keep copies of your form each year. You should also keep copies of pay stubs and W-2 tax forms in case you need them for verification later.

Should you pursue Public Service Loan Forgiveness?

Before you move ahead with this program, consider how much student loan debt you might have after 10 years of repayment.

This program is most valuable if you have high loan balances relative to your salary. If your loan balances are low, however, it’s unlikely that you’ll have much debt remaining after a decade. Likewise, if you earn a lot and don’t qualify for reduced payments, you might have already paid most or all of your loans in 10 years.

See where you stand by comparing different student loan repayment plans and using our PSLF calculator to estimate your remaining balance after 120 payments. Keep in mind, this calculator is a rough guide and doesn’t guarantee eligibility or the amount of debt to be forgiven.

Along with crunching the numbers, don’t forget to consider your career plans. If you crave a career in public service, this program could be the right move. That said, it’s probably not worth committing a decade of your life to a career path that’s not a perfect fit just for the sake of loan forgiveness.

In the end, PSLF isn’t the only solution. Check out other options for student loan forgiveness and strategies to make repayment easier or cheaper, such as student loan refinancing.