Public Service Loan Forgiveness (PSLF) is a federal program that forgives student loan debt for borrowers who work for a government or non-profit employer. This includes teachers, firefighters, nurses, military members and other public service workers. However, the program has strict requirements and many borrowers who apply for it are denied.
If you think you might qualify for PSLF, it’s important to understand the rules before you apply.
How Does Public Service Loan Forgiveness Work?
PSLF forgives the remaining balance on Direct Federal Loans after a borrower makes 120 qualifying monthly payments while working for a qualifying employer.
To qualify for PSLF, you must be working full-time for a qualified employer, or at least 30 hours per week. Eligible loans include federal Direct Loans and federal loans that were consolidated into a federal consolidation Loan. Private student loans, Federal Family Education Loans (FFEL) and Federal Perkins Loans are not eligible for public service loan forgiveness.
To benefit from PSLF, you will have to change to an income-driven repayment plan. These plans offer a new monthly payment based on your income and extend your repayment term to 20 or 25 years. (If you remain in a standard repayment plan, you’ll pay off your loan in 10 years, leaving nothing to forgive.) Qualifying repayment plans include all income-driven repayment plans:
- Revised Pay As You Earn Repayment Plan (REPAYE)
- Pay As You Earn Repayment Plan (PAYE)
- Income-Based Repayment Plan (IBR)
- Income-Contingent Repayment Plan (ICR Plan)
Once you switch to an income-driven repayment plan, PSLF will forgive your loan balance after you make 120 qualifying payments.
Payments are considered qualified if you’re working at an eligible job when you make them. But, if you end up working for a non-qualifying employer, the program will still count your previous qualifying payments. That means you may still be able to have your loans forgiven if you return to eligible employment at a later date.
Completing the Employment Certification for Public Service Loan Forgiveness form on an annual basis can help you keep track of your payments and eligibility.
Which Jobs Qualify for Public Service Loan Forgiveness?
Jobs that qualify for Public Service Loan Forgiveness include:
- Emergency Management
- Government (excluding time served as a member of Congress)
- Military Service
- Public Safety
- Law Enforcement
- Public Health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in health care practitioner occupations and health care support occupations, as such terms are defined by the Bureau of Labor Statistics)
- Public Education
- Social Work in a public child or family service agency
- Public Interest Law Services (including prosecution or public defense or legal advocacy on behalf of low-income communities at a nonprofit organization)
- Early Childhood Education (including licensed or regulated childcare, Head Start, and State funded prekindergarten)
- Public service for individuals with disabilities
- Public service for the elderly
- Public library sciences
- School-based library sciences and other school-based services
- 501(c)(3) tax exempt organizations
- Teaching as a faculty member at a Tribal College or University
- Teaching as a faculty member in a high-need subject area or shortage area (including nurse faculty and foreign language faculty)
Volunteering full-time for the AmeriCorps or Peace Corps also counts as qualifying employment for PSLF.
Employers that do not qualify for Public Service Loan Forgiveness include:
- For-profit government contractors (as opposed to directly working for a government agency)
- For-profit business
- Labor Unions
- Partisan Political Organizations
- Religious organization (unless the job is unrelated to religious instruction, worship services or proselytizing)
How to Apply for Public Service Loan Forgiveness
Once you’re ready to apply for PSLF, you will need to complete and submit the Public Service Loan Forgiveness Certification and Application form. This is the same form that you would have submitted for employer certification. You will have to include your employment history for the entire time period when you made qualifying payments.
The Department of Ed offers a Public Service Loan Forgiveness Help Tool to assist borrowers with their applications. You can also use the tool to find out if you work for a qualifying employer.
Very Few Borrowers Have Qualified for PSLF
However, since the Public Service Loan Forgiveness program began in 2007, very few borrowers have actually had their debt forgiven. According to data from the Dept of Ed, as of April 2021, 98% of PSLF applications were rejected. Education Secretary Miguel Cardona believes the high denial rate is due to borrower’s “extraordinary confusion” about the process.
President Biden’s Education Department plans to rewrite the rules for PSLF to make it easier for borrowers to understand. One proposal included forgiving half of a qualified borrower’s debt after they make five years of qualifying payments.
How COVID Forbearance Affects PSLF
Federal student loans currently qualify for a payment pause and 0% interest rate through September 30, 2021. During this COVID relief period, eligible borrowers may receive credit for qualifying payments toward PSLF. Keep in mind, however, that you have to submit a PSLF employer certification form during the forbearance period in order to receive the loan payment credit.
Borrowers who qualify can also apply for PSLF during the forbearance period, as long as they reach 120 payments.
Alternatives to PSLF
Not everyone will qualify for Public Service Loan Forgiveness. Fortunately, there are other ways to reduce or eliminate your student loan payments.
For example, your loan may be eligible for another student loan forgiveness program, such as programs for healthcare professionals or employees of federal agencies. The Department of Education also offers student loan discharge programs for borrowers who are unable to repay their debt.
If you don’t qualify for a loan forgiveness program, you can opt to stay in an income-driven repayment plan. You’ll benefit from a lower monthly payment and any remaining debt will be forgiven after 20 or 25 years, depending on the plan you use. A calculator, such as the Income-Based Repayment Calculator, can help you evaluate your repayment options.
Refinancing your student loan can also provide some relief by lowering your interest rate. Interest rates are currently at historic lows, so refinancing can offer big savings, depending on your current rate.
However, if you refinance a federal student loan, you lose access to federal benefits like forgiveness discharge options. Since refinancing is only offered by a private lender, you will need good credit and a steady income to qualify. Before making the decision to refinance, be compare features and interest rates from top student loan refinance companies.