What is Public Service Loan Forgiveness?
Public Service Loan Forgiveness (PSLF) is a federal student debt relief program, specifically designed for public service professionals. If you work in a qualified public service position, then you can qualify for PSLF once you’ve enrolled in an income-driven repayment plan for your student loans and made payments for 10 years.
This provides a distinct benefit because these programs tend to run for up to 25 years. You can shave up to 15 years off your student debt elimination plan and save significantly on total interest charges applied to your debt. The remaining balances are forgiven without penalties, meaning this doesn’t damage your credit.
What professions qualify for forgiveness?
The program is specifically designed to help public servants, who often face lower income challenges even though their advanced degrees can be just as expensive. This includes:
- Police officers
Military Service Members are eligible for loan forgiveness as well, but not through this program. The Department of Defense (DoD) offers specialized loan forgiveness programs for Service Members, Reservists and Guard.
How does PSLF work?
- First you must have obtained a degree in order to work in one of the fields mentioned above; you must also work in the nonprofit service sector; so if you’re a private nurse you may not qualify.
- Next you must enroll in an income-driven repayment plan, meaning this only works for federal student loan debt (no private loans). These plans include:
- You make payments on the program for 10 years – that’s 120 payments you have to make. You can switch programs as needed if you have any challenges with the payment schedule, but you must remain in one of these income-driven solutions.
- After 10 years, you become eligible for PLSF. The government forgives your remaining balances without credit penalties, just as if you’d paid off the debt in-full.
What happens if I change careers?
Eligibility for Public Service Loan Forgiveness requires on ongoing employment in the public service sector. If you change jobs and move into the private sector or switch career paths entirely then you no longer qualify. After loan forgiveness, you are free to change jobs without worrying about these restrictions.
What are the benefits of PSLF?
Loan forgiveness gives you several advantages:
- You get out of debt sooner without increasing your monthly payments – these programs can take up to 25 years, but you’re out of debt in 10
- In fact, since you must enroll in an income-driven repayment plan, the monthly payment amount on your loans is matched to your Adjusted Gross Income (AGI) and family size; in most cases payments are less than 20% of your income
- You don’t damage your credit by eliminating your balances this way
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