What is Public Service Loan Forgiveness?

10/1/2024

The PSLF, established under the College Cost Reduction and Access Act of 2007, offers a path to federal student loan forgiveness for those working full-time in public service. The first borrowers became eligible for forgiveness on October 1, 2017, making it a relatively recent initiative. As of July 2024, PSLF has forgiven $69.2 billion in student loans for 946,000 borrowers, according to the Department of Education.

How does the PSLF work?

PSLF is a federal program that can forgive your student loan balance after making 120 qualifying monthly payments (10 years’ worth) while working full-time for a government or a non-profit organization. Your specific job title doesn’t matter, if you’re employed by a qualifying non-profit and meet the required hours. This could even include working two part-time jobs at different non-profits. Additionally, your time working for a non-profit can be non-continuous, allowing you to explore other opportunities and return to a qualifying position later.

Understanding your Eligibility for the PSLF

Only direct loans are eligible for the PSLF, including Subsidized and Unsubsidized Stafford Loans, PLUS Loans, and Federal Direct Consolidation Loans. If you have both federal and private loans, keep in mind that private loans aren’t eligible and must be paid off separately.

To qualify for PSLF, you must choose the right repayment plan. All income-driven repayment options, such as Income-Contingent Repayment, Income-Based Repayment, Pay as You Earn (PAYE), and Revised Pay as Your Earn (REPAYE), are eligible. Income-driven repayment plans are useful for high-debt, low-income borrowers who are looking to make lower monthly payments than they would with a standard 10-year plan. If your debt isn’t repaid at the end of the plan term- either 20 or 25 years- the IDR will forgive the remaining balance, which will be taxed as income in the year it’s forgiven.

An important note is that the required 120 payments don’t need to be made consecutively. They do, however, need to be scheduled. That means you can’t accelerate payments, and overpaying won’t help you reach forgiveness faster. In fact, extra payments will only decrease the future amount to be forgiven.

How to Apply for PSLF

To benefit from the PSLF program, you need to actively apply. Start by submitting a PSLF Employment Certification Form to verify that your employer qualifies for the program. You can find the certification form here. It’s advisable to submit a new form annually or whenever you change jobs to stay on track for forgiveness. Although not required annually, doing so is helpful for your records. You can also apply for forgiveness once eligible and certify your employment retroactively.

For most borrowers, the easiest way to submit the form is through the online PSLF Help Tool. This tool will guide you through completing the form, send it to your employer for a digital signature, and electronically submit it to MOHELA for processing. MOHELA is a non-profit organization and the official servicer for Federal Student Aid.

Read More: Taking Control of Your Student Loans

Alternatively, you and your employer can manually sign a PDF version of the Employment Certification Form. You can find the PDF version here. After signing, mail or fax the form to MOHELA. If MOHELA is already your servicer, you may also be able to upload the PDF directly to your online account.

Why is the PSLF important?

The PSLF program plays a crucial role in attracting talent to 501©(3) charitable nonprofits and encourages employees to stay in the public service sector, where compensation is often lower than in other fields. PSLF can be life-changing, yet many eligible public servants are still not enrolled. If you’re a public servant with federal student loans, you could be working toward the debt forgiveness you rightfully deserve.

Read More: Taking Control of Your Student Loans

What if I was rejected from PSLF?

Borrowers whose applications were rejected for PSLF in the past can request a reconsideration online at StudentAid.Gov. Anyone who thinks their application should be re-evaluated can submit a reconsideration request.

You can submit one or more requests to reconsider your application, whether it’s for employment certification or payment determinations. While you won’t need to provide additional documentation with your request, you may need to offer more information during the review process. There is no specific deadline for the requests, but you must still meet the payment and employment requirements, including those under the current waiver that counts previously ineligible payments.  

To determine if your employer requires reconsideration, use the PSLF Help Tool.  If your employer isn’t initially eligible, consider providing documentation explaining why your non-profit organization should qualify. The Federal Student Aid office has not specified how long the review process will take, so be sure your StudentAid.gov account has up-to-date information to receive any correspondence.

Read More: Top 10 FAQs for Your Student Loans

Options if you don’t qualify for PSLF

If you don’t meet the requirements for PSLF, don’t worry- you’re not alone. There are still several options available to help you manage or reduce your student loan debt.

• Explore other paths to forgiveness
  • PSLF isn’t the only federal student loan forgiveness program, although it’s one of the most popular. You can also consider state-sponsored repayment assistance programs, student loan forgiveness for nurses, Perkins loan cancellation, and more. Just be cautious of loan forgiveness scams.
• Stay on income-driven repayment
  • IDR plans can lower your monthly payments based on your income, and in some cases, reduce your payment to $0. After 20 to 25 years, depending on your debt type, your remaining balance may be forgiven.
• Student Loan Refinancing
  • Refinancing can save you money and help you become debt-free faster if you qualify for a lower interest rate. However, keep in mind that once you refinance federal loans, they’ll no longer be eligible for forgiveness programs or income-driven repayment plans. Make sure you have stable finances and good credit before choosing this option.

After Being Approved for PSLF: What You Need to Do

Once you’ve been approved for the PSLF program, it’s essential to keep thorough records of your payments. Each time you make a payment, you should receive a PDF or email confirmation. Your payment should also be reflected in your account statements from the previous month.

Read More: Are You Ready to Enter the Student Loan Cycle? 

The PSLF Help Tool is a great resource to help you stay on track for the 120 qualifying monthly payments. Every time you submit your PSLF certification form, you’ll receive a count of how many qualifying payments you’ve made. Ensure this number matches your records. Remember, these 120 payments don’t need to be consecutive.

If you make future payments on your qualifying federal student loans, they’ll count toward your PSLF qualifying payment count, if all other program criteria are met. Prepayments can count for up to 12 months or until your next income-driven repayment plan recertification, whichever comes first.

If you’re eligible for PSLF, don’t wait to apply.   

 

 

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