Financing Your Degree: Public Service Loan Forgiveness Program
I. What is the Public Service Loan Forgiveness (PSLF) Program?
In 2007, the U.S. Congress created the Public Service Loan Forgiveness Program to encourage college graduates to enter and work full time in public service jobs. Under this program, you may qualify for forgiveness of the remaining balance on your eligible federal student loans after having made 120 monthly payments under specific repayment plans while employed full time by certain public service employers.
II. Who is eligible?
To be eligible for the PSLF Program, you must meet three conditions:
1. You have taken out the eligible federal loans.
2. You are working full time in qualifying employment.
3. You have made 120 qualifying payments on those eligible loans while in the qualifying employment.
III. What federal loans are eligible for forgiveness?
To have taken out the eligible loans, you must have taken out a loan under the William D. Ford Federal Direct Loan Program and must not have defaulted on any of those loan(s). The Direct Loan Program includes the following loans:
- Federal Perkins Loan
- Certain Health Professions and Nursing Loans
- Federal Family Education Loan (FFEL) Program loans, which include:
◦ Subsidized Stafford Loans
◦ Unsubsidized Stafford Loans
◦ Federal PLUS Loans – for parents of students and graduate or professional students
◦ Federal Consolidation Loans (excluding joint spousal consolidation loans)
If you are uncertain what kind of loans you have, you can find information about your federal student loans in the U.S. Department of Education’s National Student Loan Data System.
IV. What types of public service jobs will qualify a borrower for loan forgiveness?
You may qualify for the PSLF Program if you hold a full-time paid position in the government, a 501(c)(3) nonprofit organization, a full-time AmeriCorps position, the Peace Corps, or private public service organizations. Regardless of your specific title, your employment will still qualify as long as you employed full time by one of these organizations. You may work at any level of government in all but one position – you cannot be a member of the U.S. Congress.
Even if you do not work for the government or a nonprofit organization, your employment may still qualify if you are employed by a public service organization, whereby your organization is not organized for profit, a labor union, a partisan political organization, or engaged in religious activities. The Department of Education also stipulates that the organization provide services in the following fields: emergency management, military service, public safety, law enforcement, public interest law services, early childhood education, public services for individuals with disabilities and the elderly, public health, public education, public library services, or other school-based services.
It is important to note that regardless of employment position or field, the position must be a paid position and meet the Department of Education’s definition of “full time.” The Department of Education defines full-time employment in one or more jobs as the greater of the following:
- An annual average of at least 30 hours per week
- For a contractual or employment period of at least eight months, an average of 30 hours per week
- Unless the qualifying employment is with two or more employers, the number of hours the employer considers full time
V. What are on-time, full, scheduled, monthly payments?
To qualify for the PSLF Program, a borrower has to follow specific loan repayment requirements. As the program was only created in 2007, payments on Direct Loans made prior to October 1, 2007, do not count toward meeting the 120 separate monthly payments requirement.
Each of the 120 separate monthly payments must be made for the full scheduled installment within 15 days of the due date. The specific installment that you will pay is determined under one or more of the following Direct Loan program repayment plans:
- Income Based Repayment (IBR) Plan (not available to parent Direct PLUS Loan borrowers)
- Income Contingent Repayment Plan (not available to parent Direct PLUS Loan borrowers)
- Standard Repayment Plan with a 10-year repayment period
- Any other Direct Loan repayment plan; but only payments that are at least equal to the monthly payment amount that would have been required under the standard repayment plan with a 10-year repayment period may be counted toward the 120 payments
It is important to note that, in general, only borrowers who are making reduced monthly payments through the Direct Income Loan Contingent or Income Based Repayment Plans will have a remaining balance after making 120 payments on a loan.
For more information about the repayment plans available in the Direct Loan program, please visit the student aid site.
VI. How can I keep track of my eligibility?
The Department of Education has created the Employment Certification for Public Service Loan Forgiveness form. Once you have completed and submitted the form to FedLoan Servicing, the PSLF server, you will receive confirmation of qualifying employment and Direct Loan payment eligibility.
This post is intended as an introduction to the Public Service Loan Forgiveness Program. This informational resource is not official policy. For additional details and the most up-to-date information regarding this program, please visit the U.S. Department of Education’s website.