Important: Limited Public Service Loan Forgiveness (PSLF) Waiver expires Oct. 31, 2022

In response to the COVID-19 emergency, qualifications for the PSLF program have been relaxed. Payments that previously would not have qualified for loan forgiveness may now be accepted.

Applicants that have been rejected from PSLF or TEPSLF may now be eligible for student loan forgiveness.

Learn more about PSLF updates and the Limited PSLF Waiver»

Public Service Loan Forgiveness (PSLF) is a popular student loan forgiveness program established by the federal government in 2007. It provides an amazing opportunity to wipe the slate—or more accurately, your balance sheet—clean but getting into the program can be challenging. Is PSLF worth applying for? Absolutely.

The qualification process is long, complicated, and worse still, not guaranteed. However, If you qualify for PSLF, you could get out of student loan debt while only paying a fraction of what you originally borrowed. This guide will tell you everything you need to know to maximize your chances of securing student loan forgiveness through this highly beneficial program and help you understand how PSLF works.

Table of Contents

What is PSLF?

Public Service Loan Forgiveness is a program that forgives any remaining federal student loan balance to those who’ve worked in a qualifying public service profession. Approved applicants can have their student loan balance wiped away after making 120 qualified payments towards federal student loans. There’s currently no cap on the dollar amount that can be forgiven.

How PSLF Works

  1. Only federal student loans qualify for Public Service Loan Forgiveness.
  2. Applicants must be enrolled in an income-driven repayment plan:
  3. You must make payments on that program for 10 years—that’s 120 qualifying monthly payments. Keep your own records to feel confident in your number of qualifying payments.
  4. During that time, you must maintain employment in the public service sector by working for a qualifying employer.
  5. After 10 years of maintaining eligibility, you can send in your PSLF application.
  6. Once approved, the loan servicers must forgive the remaining balances on all federal loans included in the qualifying repayment plan.

Is PSLF worth the hassle?

If you can make PSLF work, it’s absolutely worth the effort it takes to apply. According to EducationData.org, there are an estimated 3 million Americans who are eligible for federal student loan forgiveness, and an estimated 25% of the labor force will be eligible soon [1].

We probably don’t have to tell you how much of a burden student loan debt can be and how it can lead to major life delays, such as homeownership and marriage. But student loans are otherwise extremely difficult to get rid of besides the long and laborious process of simply paying them off, which can take 10, 25, or even 30 years and cost tens of thousands of dollars in interest. They aren’t easily discharged by bankruptcy and default hurts your credit.

Simply put, there are few other opportunities that offer such far-reaching student loan relief as the Public Service Loan Forgiveness program. There’s currently no maximum amount of student loans that can be forgiven, and the forgiven loan includes both principal and accrued interest.

Another reason to apply for PSLF is that even if you’re not entirely sure if you’d qualify, the income-driven repayment plans which are required, offer student loan forgiveness on their own. All of the four IDR plans forgive the remaining balances that aren’t repaid at the end of the repayment period.

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Public Service Loan Forgiveness qualification requirements

If we had to choose one word to describe PSLF’s eligibility requirement, it would be ‘strict’.

Fewer than 1% of applications have been approved since the program started accepting applications in 2017[1].

The first thing to do before applying for income-driven repayment or consolidating your federal student loans is to ensure you meet the basic employment and income requirements for the program.

Employment

To qualify for Public Service Loan Forgiveness, applicants must work full-time (as defined by your employer) for either a government organization (federal, state, local, or tribal) or a non-profit organization at the time of an application (some nonprofits may still qualify as a public service even if they’re not under Section 501(c)(3) of the Internal Revenue Code). However, individuals who work multiple part-time jobs at qualifying employers for a combined 30 hours per week will be considered full-time and eligible for PSLF.

In addition to employers that meet the criteria above, certain professionals who service or work with underserved, low-income communities may still qualify for PSLF even if they do not work at a qualified employer. These include:

  • Health care and support occupations (counselors, social workers, or other specialist services)
  • Public library services
  • Services for the disabled and elderly
  • Public interest law services
  • Public safety
  • Military service with any of the U.S. armed forces or National Guard

Who isn’t eligible?

Labor unions, partisan political organizations, or for-profit government contractors do not qualify. Contractors’ eligibility is determined by the status of their own organization, not the status of the organization they are working for. Example: You’re a web designer at a private company that’s been hired to create a new website for a local church. Unless your company is registered as a nonprofit, you are not considered eligible even though you are working with a qualified nonprofit organization.

TIP: Apply for employment certification

The Department of Education offers an Employment Certification Form through StudentAid.gov. Completing this form is not a requirement to get approved for loan forgiveness.

However, remember that you must be working for a qualifying institution in public service throughout the 10-year repayment period (though that time doesn’t have to be consecutive). If you don’t strictly adhere to that eligibility you could find yourself rejected for PSLF.

As soon as you enroll in the repayment plan, submit an employment certification form and recertify every year and anytime you change jobs. This is your best guarantee that you will qualify for loan forgiveness.

Income/Financial Need

You’ll need to have already been approved for an income-driven repayment (IDR) plan before applying for Public Service Loan forgiveness. The question then becomes: how do you qualify for an IDR?

Anyone is eligible for the REPAYE and ICR plans which have no maximum income thresholds. The slightly more complicated plans to determine eligibility for are the PAYE and IBR plans which require that your new monthly payment under an income-driven repayment plan is less than what you would pay on a 10-year standard repayment plan.

No matter which IDR you are on, you must recertify your income every year to maintain eligibility in the program. Otherwise, you get switched to a non-hardship program and no longer qualify for PSLF. Any deductions that would reduce liability on your tax returns also help maintain eligibility for these programs. Things like child care deductions can work in your favor. Make sure to maintain your certification and re-certify promptly each year.

Calculating your monthly payment for a REPAYE, PAYE, or IBR income-driven plan

What these income-driven plans will charge is based on a percentage of your discretionary income. Discretionary income is the difference between your Adjusted Gross Income (AGI) and 150% of the federal poverty level (FPL) as defined by the Department of Health and Human Services [1].

Currently, the poverty guidelines for the 48 continental U.S. are as follows:

Household Size Poverty Guideline
1 $12,880
2 $17,420
3 $21,960
4 $26,500
5 $31,040
6 $35,580
7 $40,120
8 $44,660
9+ $4,540 for each additional person

Let’s say you’re a single parent with two children that makes $55,000 a year. Your total household size would be three. To determine what 150% of that corresponding poverty guideline is, we would multiply $21,960 by 1.5. Then, find the difference between that total ($32,940) and your income ($55,000) to determine what the government considers discretionary income—i.e. what you can afford to spend on student loans. In this example, that parent’s discretionary income would be $22,060.

Since PAYE and IBR are based on 10% of your discretionary income, the parent’s student loan payments would be $2,206 divided by 12 (since there are twelve months in a year) for a monthly payment total of $183.83. If this monthly amount is less than the monthly payment of a standard repayment plan, they could be approved (granted that they meet the other criteria as well).

Payment

It’s vital to understand what types of payments will qualify for the 120 needed for Public Service Loan Forgiveness. Qualifying payments must meet all of the criteria below and have been paid…

  • While working full-time for a qualifying employer;
  • Under a qualifying income-based repayment plan;
  • For the full amount shown on your bill no later than 15 days after the due date
  • After October 1, 2007

Payments made during a grace period, deferment, or forbearance—any period where the borrower was not required to make payments—are not qualifying.

Note: Qualifying payments do not need to be consecutive.

You could handle your student loans yourself, but you may be better off with a little professional help. Find out how.

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Public Service Loan Forgiveness FAQs

How long does it take to apply for PSLF?

Applying for Public Service Loan Forgiveness takes about 30 minutes online, and must be completed in a single session.

What materials do I need to apply for PSLF?

Have your most recent W-2s on hand or your employer’s Federal Employer Identification Number (EIN).

Does PSLF apply to private student loans?

No Public Service Loan Forgiveness only applies to federal student loans. Private student loans are not eligible for the PSLF program.

Can I get PSLF sooner if I pay more than the monthly minimum?

No, paying more than the monthly minimum or making multiple payments a month will not count towards qualifying payments. PSLF can not be earned any sooner than 120 months/10 years.

Other types of student loan forgiveness if you don’t qualify for PSLF

There are other ways to forgive federal student loan debt that isn’t tied to Public Service Loan Forgiveness. Military Service and even service in AmeriCorps, PeaceCorps, or Volunteers in Service to America allow you to qualify for loan forgiveness.

Temporary Expanded Public Service Loan Forgiveness (TEPSLF)

The Temporary Expanded Public Service Loan Forgiveness program was created under the Consolidated Appropriations Act in 2018 as a way to combat the low rates of acceptance for regular PSLF applications. Payments that did not qualify for PSLF may qualify towards TEPSLF, which are now a single form.

The primary difference between PSLF and TEPSLF is that only Direct Loans are eligible in the temporary version of the program. Neither Perkins loans nor FFEL loans can be included. The criteria for qualifying payments mirror the PSLF terms.

Military student loans forgiveness

Military loan forgiveness doesn’t run through the DoED; it runs through the DoD (Department of Defense). The DoD actually repays your loans up to a certain amount—$60,000 overall. You must serve at least 3 years. The DoD Loan Repayment pays out up to $10,000 per calendar year. You can also qualify for forgiveness under a Veteran’s Total and Permanent Disability Discharge.

Volunteer service student loan forgiveness

Volunteer service doesn’t forgive all your debt, but it can forgive some. There’s one program that cancels 15% of Perkin’s loan debt for each year of PeaceCorp service. You can do 12 months of AmericaCorps service or 1,700 hours of VISTA service for up to $4,275 towards your loans.

Perkins loans forgiveness

Perkins loan borrowers that aren’t in the PeaceCorps, but work in fields like teaching or nursing, can also get their loans forgiven.

Pursue as many avenues for student loan forgiveness as possible. Anything you can do to decrease your student loan debt is worth it.

You could handle your student loans yourself, but you may be better off with a little professional help. Find out how.

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2021-2022 Limited PSLF Waiver & Temporary Expansion

Good news for those who were previously ineligible or rejected for PSLF or TEPSLF. On Oct 6, 2021, in response to the COVID-19 emergency, the Department of Education issued the Limited PSLF Waiver to relax the rules about what counts as a qualifying payment. PSLF is now accepting several types of payment, and under circumstances that previously would not have qualified.

Notorious for its low acceptance rate (which hovers between 1% and 2%), these PSLF updates significantly expand the program’s potential reach. The new rules state that any prior repayment –regardless of loan program or repayment plan–would count towards one of the 120 needed payments. Members of the White House are urging student loan borrowers to apply—or in many cases, to try again.

What are the temporary PSLF changes?

Prior to the PSLF expansion, only full, on-time Direct Loan payments on a standard or income-driven repayment plan met PSLF requirements. Periods of service that counted towards Teacher Loan Forgiveness (TLF) did not count. Currently, the waiver expands eligible payments to…

  • Direct, Perkins, and Federal Family Education (FFEL) loans (Parent PLUS loans are not eligible)
  • Payments through any type of repayment plan (including graduated and extended)
  • Late or partial payments
  • Forbearance periods of either A) 12 or more consecutive months or B) 36 or more cumulative months (COVID-19 Emergency Relief forbearance periods are not included)
  • Months in deferment prior to 2013 (including Economic Hardship Deferment after 2013)

Program requirements that haven’t changed are that applicants will still need to have qualifying employment (which also hasn’t changed) and loans consolidated into a Direct Consolidation Loan first. Periods of default or in-school deferment still won’t qualify.

Another major difference that should pique the interest of federal student loan holders everywhere? Applicants do not have to be employed by a qualified employer at the time of applying for forgiveness. Instead, they only need be employed full-time during the calendar month when eligible loans were in repayment. This means that if you worked at a qualifying employer and later switched to the private industry, you can take advantage of your time in the non-profit sector and get a financial reprieve for your past service.

But time is ticking to take advantage of these significantly more lax qualification requirements. The temporary PSLF expansion ends October 31, 2022, and applications must be submitted and processed by this date—which can take several weeks. However, applicants must already have consolidated their loans into Direct Consolidated Loans to submit a PSLF application, which can also take time to process. Public Service Loan Forgiveness still has plenty of hoops to jump through, but those hoops are considerably lower than they used to be. This temporary waiver is making the PSLF worth it for more people than ever.

Read the official Limited PSLF Waiver information here.

Who started the Public Service Loan Forgiveness program?

Despite popular belief, PSLF is not “Obama Student Loan Forgiveness”. The Public Service Loan Forgiveness program started in 2007 under George W. Bush. However, the Department of Education under Obama changed the rules for hardship eligibility for the federal repayment plans in 2010, 2012, and 2015. New estimates from the Congressional Budget Office estimate the PSLF will now cost taxpayers over $12 billion over the next 10 years.

Who started the Public Service Loan Forgiveness program?

Despite popular belief, PSLF is not “Obama Student Loan Forgiveness”. The Public Service Loan Forgiveness program started in 2007 under George W. Bush. However, the Department of Education under Obama changed the rules for hardship eligibility for the federal repayment plans in 2010, 2012, and 2015. New estimates from the Congressional Budget Office estimate the PSLF will now cost taxpayers over $12 billion over the next 10 years.

This has all made a 10-year-old loan bi-partisan loan forgiveness program highly controversial. And just like President Obama’s DoED had the authority to change PSLF and the repayment plans, so did President Trump. He and his education secretary vowed to cancel PSLF entirely and replace it with a better program but failed to do so before the end of his term. President Biden then implemented then provided the temporary expansion, as well as the waiver.

Thus, PSLF can be a bit of a moving target. It changes with every new administration. That means no one can say what will happen after 2024, but some rightly worry rules may change again just as they become eligible for forgiveness. If eligibility requirements change and they apply those changes retroactively, even approved employment certification may not be enough—that happened to many borrowers under the Trump administration. You could apply for forgiveness after doing everything right, only to find the rules have changed.

The DoED could also cap the amount of debt they forgive. That would make PSLF like most other programs, that only a portion of your debt could be eligible for forgiveness.

Regardless of your political beliefs, if you think you qualify for PSLF follow this story closely. Any change to the program could affect your eligibility, regardless of your previous status. Get into the program immediately if you haven’t already started and maintain eligibility to the best of your ability.

Sources:

Article last modified on September 12, 2022. Published by Debt.com, LLC

Reviewed By

Andrew Pentis

Expert contributor