The Ultimate Guide to Public Service Loan Forgiveness

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.

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 of public service jobs 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.

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 installment amount - not just what your bill says -  within 15 days of the due date). As of August 2020, prepayments are allowed, but you can see our full article on Pay Ahead Status and PSLF and why we still caution against this.
• 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.

If you do make a large lump-sum prepayment, that payment will potentially count as qualifying payments (given employment certification is on file and all other eligibility conditions are met) under the PSLF Program for up to 12 months or until the next time their income-driven repayment plan is due for certification, whichever comes first. We still don't advise this, but it does help with the pay-ahead status issue. See the announcement here.

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.

First, you’ll want to complete and submit the Application and Employment Certification form for Public Service Loan Forgiveness annually or when you change employers.

Note: This form was updated in November 2020, and is used for both PSLF and TEPLSF, for employment certification and applying for forgiveness. You can still submit the prior form, but we recommend everyone switch to the new form.

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!

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 LoanBuddy and see if it can help you better track your PSLF eligibility.