One year ago, the first round of public servants became eligible for Public Service Loan Forgiveness. These early recipients were the first to have their Direct student loans forgiven with the PSLF program.
With growing awareness of the program, and an increased number of income-driven repayment plans, more and more people are becoming eligible for loan forgiveness. Are you a person who could become eligible for loan forgiveness? Find out in our ultimate guide to student loan forgiveness.
If you want to get any questions answered around PSLF or how to apply outside this guide, check out our PSLF Online Training Course.
What Is Public Service Loan Forgiveness?
Public Service Loan Forgiveness (PSLF) is a federal program that allows loan forgiveness for qualified employees who work full-time for a variety of employers. Full-time work requires working at least 30 hours per week.
After 120 on-time payments (10 years) of federal student loans (more on that below), qualified applicants will have the remainder of their federal loans forgiven.
Qualified employers include:
- The government (including military, law enforcement, schools. and universities)
- Tax-exempt not-for-profit 501(c)(3) companies; including tax-exempt hospitals, tax-exempt charitable organizations, tax-exempt educational institutions, etc. (It’s important to note that if you’re a member of clergy or your work is religious in nature, you may not receive exemption. To qualify you must spend at least 30 hours per week on work that doesn’t have to do with proselytizing, conducting worship services, or providing religious instruction.)
- Peace Corps or AmeriCorps
- Other non-profit organizations that provide one of the following services:
- Emergency management
- Military service
- Public safety
- Law enforcement
- Public interest law services
- Early childhood education (including licensed or regulated healthcare, Head Start, and state-funded prekindergarten)
- Public service for individuals with disabilities and the elderly
- Public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in healthcare practitioner occupations and healthcare support occupations, as such terms are defined by the Bureau of Labor Statistics)
- Public education
- Public library services
- School library or other school-based services
Advocacy groups, political groups, and labor unions are not qualified employers.
How Does the 120-Payment System Work?
To actually get loan forgiveness, you have to make 120 “qualified” payments on your student loans. Qualified payments have to meet the following criteria:
- You were employed full-time by a qualified employer
- Your loans were not in deferment, forbearance, or default
- The payment was made after October 1, 2007
- Made on time and in full (paid the full amount on your bill within 15 days of the due date)
- Under a qualified repayment plan (One of the most important things to understand is the requirement of being under a qualified repayment plan. Qualified repayment plans include any income-driven repayment plans. These include monthly payments of $0 that might accrue if you’re earning a wage below the poverty line. Payments made under the Standard Repayment Plan for Direct Consolidation Loans would qualify for PSLF purposes only if the maximum repayment period was set at 10 years. If you have Direct Consolidation Loans, be sure to combine the loan with an income-driven repayment plan.)
The 120 payments don’t have to be consecutive. So if you take a few years off of public service work, you can come back in where you started.
However, if you consolidate your loans, the clock on the 120 payments restarts. That’s right. The clock on the 120 payments resets when you consolidate your student loans. The best time to consolidate your student loans is at the beginning of the loan forgiveness process. The second best time is never.
Some tips for making the most out of PSLF:
- Don’t make larger payments than are necessary.
- Don’t make more than one payment per month.
- Get on an income-driven repayment plan right away.
- If you want to consolidate your loans, do so as soon as you graduate from college.
When Does the Clock Start for My 120 Loan Payments?
You can begin making qualifying PSLF payments once the in-school deferment and grace period on your loans ends. If you want to start making payments right away, consolidate your loans and begin repayment immediately.
Warning: Consolidating loans can “reset the clock” on PSLF! Remember, consolidating your federal loans resets the clock on Public Service Loan Forgiveness. Don’t consolidate if you’ve already made eligible payments under PSLF.
How Do I Apply for Public Service Loan Forgiveness?
First, you’ll want to complete and submit the Employment Certification form for Public Service Loan Forgiveness annually or when you change employers.
You’ll mail the form to:
U.S. Department of Education
FedLoan Servicing
P.O. Box 69184
Harrisburg, PA 17106-9184
After you submit this form, FedLoan Servicing will become your loan servicer. At this point, FedLoan Servicing will review your loan payment history to determine how many qualified payments you made. If you had multiple employers, be sure to submit multiple Employment Certification forms.
Each year, you should continue to submit your Employment Certification form. But you should also save IRS W-2 documents and other documents that can prove you were a full-time employee. This will make it much easier for FedLoan Servicing to track your payments (and you’ll avoid major hassles once your 120 payments are complete).
FedLoan Servicing allows you to check on the number of payments you’ve made through its account access area.
Once you’ve reached 120 payments (congratulations!), you can apply for student loan forgiveness.
You can simply upload the form to MyFedLoan.org/FileUpload or mail it in to:
U.S. Department of Education
FedLoan Servicing
P.O. Box 69184
Harrisburg, PA 17106-9184
FedLoan Servicing will let you know that your application is approved, and you’ll receive notifications of loan balances of zero!
Which Loans Are Eligible for PSLF?
Private student loans are not eligible for loan forgiveness. PSLF is only a program for student loans of the Federal Direct Loans type. These include:
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans
- Direct Consolidation Loans (Editor's Note: See the warning about this as previously written in this article.)
If the loan isn’t on the list above, it’s not eligible for loan forgiveness.
Are Direct Consolidation Loans Really Eligible?
Direct Consolidation Loans are eligible for loan forgiveness, but with several important caveats.
First, if you and your spouse consolidated onto a Direct Consolidation Loan, and only one of you met the employment requirements, the portion of the balance attributable to the qualified employee is forgiven. The rest is not.
Additionally, joint consolidation loans from the Federal Family Education Loan (FFEL) Program cannot be forgiven.
Finally, any time you consolidate your federal loans, you restart the 120-payment requirement.
Are FFEL Loans Forgivable?
Up until June 2010, Federal Family Education Loan (FFEL) Program loans were one of the biggest federal loans issued to student borrowers. Unfortunately, these loans were not issued by the U.S. Department of Education, and do not qualify for PSLF.
You could consolidate these loans into a Direct Consolidation Loan, but that will reset the clock on your PSLF.
Is Loan Forgiveness Taxable?
One of the best perks of PSLF is that the loan forgiveness is not taxable. No matter how much interest you’ve accrued, the full balance of the loan is forgiven, and the amount forgiven isn’t taxed.
What Happens to PSLF If I Default on My Loans?
If you’re on an income-driven repayment plan, you should never default on your loans. Paying your student loans should be one of your highest financial priorities.
That said, any debt in default is not counted as a qualifying payment on your loan. That includes any time you spend “rehabbing” the loan to current status.
Keep your student loans out of default by prioritizing repayment. Remember, if your income adjusts downward (say you lose your job), you can reset your repayment plan in the middle of the year.
Will Public Service Loan Forgiveness Still Be Around?
PSLF is one of the favorite punching bags for Congress. An act of Congress could eliminate the program today. That said, it’s more likely that the rules for qualified employment will be narrowed rather than the program being completely eliminated.
If you’re very worried about it, you may want to continue making the standard payments on your student loans. Just remember, all of the potential changes are just proposals. Check out the full list of Trump Student Loan Forgiveness Proposals here.
Final Thoughts
PSLF is a great program, but it does require you follow very strict rules to get your loans forgiven.
If you're unsure about what to do or how to fill out the certification forms, check out our PSLF Online Training Course here.
Susan says
I am confused what student loan forgiveness program I am eligible for .
I have federal Stafford loans. My loans went into deferrment and forbearance due to hardship. What can I do?
Robert Farrington says
What do you do? For any of these forgiveness programs, you need to get out of forbearance and back on a repayment plan to start making payments.
Cristina says
After 120 payments (10years) my son’s loans will be just about paid off. How is this a good deal for him.
Robert Farrington says
That’s great! Just about means he can still get some forgiveness. It’s a good deal for him because:
1. He is earning more than other people
2. He took out less loans than other people
Hopefully this can be a stepping stone to future financial well being!
Chris says
I have a question for which I have not been able to find the answer. I am on the income-based repayment plan, which I know qualifies for Public Service Loan Forgiveness. I have been making on-time payments since 2014. (Technically, I have been making payments since 2011, but I re-consolidated in 2014, and I know the “clock starts over” if you re-consolidate.) I learned just last month that my employer qualifies for PSLF because of 501(c)(3) status (I had no idea). The question: if I apply and am approved for the PSLF program, do all those payments made since 2014 count towards my 120 total? I have searched high and low for an answer. All I can find about “retroactive” payments is information telling me that payments made before 2007 cannot count because the program didn’t exist then. Fine…but that doesn’t answer my question. My question concerns the payments I’ve made since 2014, when I re-consolidated. (That’s four years worth of payments!) Do those count toward the 120, or do I start (again) at zero once my application is approved?
Robert Farrington says
Yes, you technically don’t even have to send in an employer certification until you’ve already made 120 payments. So, as long as your employer certification covers all the dates listed, and the other aspects apply (correct loan and repayment plan), then all of those payments count.
Erica says
Can you work several per diem positions that add up to more than 30 hours a week for qualified employers (like hospitals) or does it have to be “full time” in your job position?
Robert Farrington says
You can work several part time positions to get to 30 hours per week, but you must be considered an employee. Per diem is considered an independent contractor (you work for yourself), so that work wouldn’t count.
Charlotte Robertson says
If you have more than one loan and don’t consolidate do you have to make 120 payments for each loan or just 120 total to be forgiven for all loans outstanding?
Robert Farrington says
Every loan is tracked individually. It typically doesn’t make sense to consolidate because you actually can cause more problems that it solves.
Brad Boyd says
I am confused about this. I have been making payments since Nov 2016. I worked for a hospital full time as a resident for 2 years at a modest salary. I now work for another hospital as a specialist at over 2x the residency salary. I am on a REPAYE program and am due to recertify my income in March. I am being told that if I want to go the PSLF route, I have to repay over 10 years instead of 20 or 25. Doesn’t that defeat the purpose? Or should I not even mention the PSLF and wait 10 years to apply for forgiveness?
Robert Farrington says
PSLF is 120 payments. Depending on your salary, your RePAYE payment may pay off your entire loan balance before that 120 payment mark is met.
Either way, just consider them two independent issues – your RePAYE certification and PSLF paperwork.
Bruce Chandler says
I’m a bit confused – I have old Stafford Loans from the late 1990s and I still owe a balance of about 24K – but since 2000, I have worked continuously for state governments – two different states – and one tribal government (as a librarian). I currently work for the Dept of Defense. I’ve made the 120 payments – how do I prove that I worked for these agencies? Do I submit qualified employment forms from each? I guess what I’m asking is can I qualify for the PSLF and get that last part of my loan paid off? Thanks! RBC
Robert Farrington says
Since your loans are so old, you likely don’t have the correct loan type to qualify (sadly). You need to have Direct Loans, not the old FFEL loans. You would have to re-consolidate your existing loans to this to qualify. If you had done this in 2007, you could likely have your debt forgiven.
Remember, it requires three things to qualify:
1. Direct Loans
2. Qualifying Repayment Plan
3. Qualifying Employment
Lucia Harris says
I have a student loan the school closed down and got many ppl sued them can I get a student loan forgiveness?
Robert Farrington says
Maybe. It’s a process called Borrower Defense to Repayment. Read this: https://thecollegeinvestor.com/18752/understanding-borrower-defense-repayment/
Rachel says
I started making payments in 2009. I have only worked for 501 3c . I was making payments at more than $400.0o month until 2017 when I applied for the IBR payment plan. In 2017-18 I paid $180.00 month, 2018- $254.00
My question is- since I was making more than double payments on standard payment plan (25 years), making less than I have in past 3 years do those payments apply toward 120 consecutive for PSLF?When the program first came out, little info was available and I was told to just get certification letter from employer when need.
All these years I made payments, my 10 years could be up and I based it all on what I was told. Earning less, paying more. Now owing more due to interest.
Robert Farrington says
PSLF requires three things:
1. Direct Loans
2. Qualifying Repayment Plan
3. Qualifying Employment
Given your loans were around 2009 when you started making payments, I’d be concerned you don’t have Direct Loans, but rather FFEL Loans. What kind of loans do you have?
Second, payments – standard plan, IBR, PAYE, RePAYE, and ICR all count. In 2009, only ICR existed. So, I’d also be concerned you don’t have the correct repayment plan.
Based on this, you need to go through your loan history and see what qualifies. Have you submitted PSLF Certification? How many payments did FedLoan say qualified?
Amanda says
I’ve had student loans in debt consonsolidation since 2007 and have made 120 monthly payments on time, but have only worked for a qualifying employer for just under 2 years. Do I need to wait until I have worked for this employer for 10 years to qualify?
Robert Farrington says
Yes, each of your 120 payments (10 years) is counted individually. So, you can certify this employer, and that gives you 2 years. What did you do before this? Could your previous employers potentially qualify? If not, then yes, you have 8 years to go.
Lorrie Cline says
Hello! I am happy to report that I am 100 qualifying payments in towards the 120! I had a battle going for the past 1.5 years due to a discrepancy on number of qualifying payments. I won! As I’ve worked very hard to ensure I did everything correct the last thing I want to do is mess anything up…my question is, do you know if it is okay to pick up a part-time (9 hrs per month) job on the side? I would continue with my full-time qualifying position at a 501(c)3.
Thanks so much!
LC
Jynger Morris says
What if I didn’t consider PSLF previously when I worked at another non-profit and never filled out a form at that time (I would have had about 60 payments while at that job) and am now at a non-profit again, and am prepared to file my first form–with about 13 more payments under my belt. My loans were taken out between 2003 & 2005 and I’ve paid (never missed a single payment) on them since inception–I began paying immediately. I only have about $5k left–but it’s still $5k. Is this worth my effort?
Robert Farrington says
I think it’s totally worth the effort IF you have the right loan types – given they are 2003 and 2005, it would be very rare you have Direct Loans – you probably have FFEL loans. Check your loan type first. If you have qualifying loans, then I would make the effort to certify your employment by getting someone at that non-profit to sign off on your certification.
Palma says
I’ve been paying on school loans since 2000. I deferred loan repayments recently while completing my doctorate. I start repaying next month. Do any of the payments made qualify towards 120 for loan forgiveness, or do I start over?
Robert Farrington says
Probably not based on your loan start date. The three criteria are:
1. Direct Loans – but these loans didn’t become a thing until 2007. So your loans are probably FFEL Loans, which don’t qualify.
2. Qualifying Employment
3. Qualifying Payment Plan
However, if you still think it will take you longer than 10 years, and you work in public service, you can always re-consolidate those old loans into new Direct Consolidation Loans, and become eligible for PSLF.
Also, if you did consolidate already and have Direct Loans, then yes, if you can go back and get your past employer to certify you, then you can get the past qualifying payments to count – as long as they meet all three criteria.
Donna says
Can a co-signer apply for PSLF? We are paying our deadbeat daughter’s loans and will be forever. My husband is a government employee.
Robert Farrington says
Hey Donna! Federal loans don’t have cosigners – the loan is either a private loan with a cosigner (in which case there are no forgiveness options), or you have a Parent PLUS Loan, which is in your name 100% and your daughter doesn’t have any responsibility for it. If it is a Parent PLUS Loan, PSLF is a potential option if it’s in your husbands name, but he does need to do a few steps. We break it down here: Options for Parent PLUS Loans.
Trish says
Hi I just recently signed up with Financial Preparation Services &I’m hoping it’s not a scam.My 30K student loan just entered default.They told me I would pay 120 mos with the first 5 payments $249 then pay $67 for remainder 115 payments.$42 out of the 67 is a monthly fee they will charge me.They told me my credit would began to get better.I haven’t made my first payment yet.I started reading their reviews &now I’m afraid I’m being scammed
Robert Farrington says
If you’re in default, you need to get out of default by rehabilitating your loans. See this: Student Loan Rehabilitation.
Then, once you’re on an income-driven repayment plan, you can start qualifying for PSLF.
You never need to pay for third party help, but you always can. Read this first: https://thecollegeinvestor.com/16429/is-your-student-loan-repayment-company-a-scam/