Public Service Loan Forgiveness: Do You Qualify and Is It Right For You?

Miranda Marquit Updated on June 17, 2019

Editorial Note: This content is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the financial institution.

One of the most popular student loan programs out there is Public Service Loan Forgiveness (PSLF) — and it’s no wonder why. The program promises big rewards for student loan holders in the form of completely wiping away your debt balance.

But, as with a lot of programs, the application requirements can be confusing. Additionally, there are questions about how long the program will remain intact. Before pursuing Public Service Loan Forgiveness, you need to ask yourself if PSLF makes sense for your financial situation.

Don’t fear — we’ve made it easy for you. Here’s what you need to know about who qualifies for Public Service Loan Forgiveness and whether it’s the right choice for you.

What is Public Service Loan Forgiveness?

The Public Service Loan Forgiveness Program is a federal program designed to forgive student loan debt for employees of certain public and nonprofit jobs. It erases whatever remains of your federal student loans after you’ve made 120 qualifying payments while working for an eligible organization.

For most borrowers, this means you’ll need to work for 10 years before receiving loan forgiveness from PSLF. Of course, after 10 years of repayment, your loan balance might be a lot smaller than it was when you started. But if you owe a lot in student loans, the forgiveness that comes from PSLF could still be a huge financial relief.

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To gain loan forgiveness, it’s crucial to meet all the program’s requirements year after year. Unfortunately, some borrowers have counted on PSLF only to discover — 10 years later — that they didn’t meet all the criteria. So if you’re going after this program, make sure you understand the ins and outs of the Public Service Loan Forgiveness qualifications.

You’ll also want to pay attention to policy changes to ensure the program remains intact. In recent years, for example, the Trump administration has repeatedly proposed eliminating PSLF. Although current applicants might (hopefully) be grandfathered in if the program were to disappear, there’s no guarantee it will be around forever.

If you’re interested in influencing policy, contact your elected representatives to let them know how you feel about PSLF. You can even follow legislation related to student loans by using our bill tracker.

What are some Public Service Loan Forgiveness jobs?

Although people ask about Public Service Loan Forgiveness jobs, the more important question would be about Public Service Loan Forgiveness employers. The Public Service Loan Forgiveness program is available to employees of:

Federal, state, local, or tribal government organizations
A 501(c)3 nonprofit
A not-for-profit that’s not 501(c)3 designated but meets other requirements related to public service
AmeriCorps, in a full-time capacity, or the Peace Corps

What your specific job is typically doesn’t matter, just so long as the organization or agency falls into one of the above categories. However, if you perform work of a religious nature as part of your job at a qualifying organization, that does not count toward the total hours.

You also don’t need to work for the same employer during the entire 120-month period. However, you must work an average of at least 30 hours per week each year, or at least the number of hours that your employer considers to be full-time work.

Public Service Loan Forgiveness qualifications: Which student loans are eligible?

Loan eligibility is another area in which you have to be careful. Not all federal student loans qualify, so be sure that yours meet the requirements.

Public Service Loan Forgiveness eligible loans are:

Federal direct subsidized Stafford/Direct loans
Federal direct unsubsidized Stafford/Direct loans
Federal direct PLUS loans
Federal direct consolidation loans

Note that all of the above loans originate from the direct loan program. Perkins loans and Federal Family Education Loans (FFEL) are not eligible for forgiveness.

Yet, there is one exception to loan qualification: If ineligible loans have been consolidated into a direct consolidation loan, then they will become eligible. However, only payments made toward the new direct consolidation loan will count toward your 120 payments. As a result, you need to be careful not to “reset the clock” on your qualifying payments by consolidating loans that were already eligible for PSLF.

Also keep in mind that although Perkins loans don’t qualify for PSLF, they can be eligible for other loan forgiveness programs, including Perkins loan cancellation.

What are the requirements for eligible payments?

Unfortunately, there’s another set of Public Service Loan Forgiveness qualifications to be aware of: having your loans on an eligible repayment plan.

The payment plans that qualify are:

Revised Pay As You Earn (REPAYE)
Pay As You Earn (PAYE)
Income-Based Repayment (IBR)
Income-Contingent Repayment (ICR)

Note that the Standard repayment plan technically qualifies as well, but since this plan spans only 10 years, you wouldn’t have any balance left to forgive after 120 qualifying monthly payments. As a result, you’ll need to switch to an income-driven plan to get forgiveness from PSLF.

No matter which plan you choose, you’ll need to have made 120 monthly payments on time and in full to qualify. Additionally, only payments made after October 1, 2007, count as qualifying payments.

How to stay on track for PSLF

Since this program began in 2007, the first cohort was evaluated for PSLF in 2017. Unfortunately, some borrowers learned too late that they weren’t actually eligible for forgiveness. To make sure you don’t find yourself in this situation, here are some important steps to take.

First, complete the Employment Certification for Public Service Loan Forgiveness form each year. This form verifies that your employment is eligible under the program, and parts of it will need to be filled out by your employer. While submitting it on an annual basis isn’t a requirement, it is helpful for your servicer to track your eligibility.

If you or your employer is unsure about any aspect of the program, consult the guide compiled by the Consumer Financial Protection Bureau for answers to your questions.

Once you submit your application, keep in mind that at that time you’ll need to be working at one of the qualifying organizations above. Also note that you’ll have to submit everything at once — your whole 10-year employment history. Having filled out the employment form and tracked your payments each year can help the Department of Education make a decision faster.

Make sure to keep copies of your form each year. You should also keep copies of pay stubs and W-2 tax forms in case you need them for verification later.

Is Public Service Loan Forgiveness right for you?

Before you decide to go all in with this program, be sure to consider how much in student loans you might have left to be forgiven after 10 years of repayment.

This program is most valuable if you have high loan balances relative to your salary. If your loan balances are low, however, then it’s unlikely that you’ll have much of your debt remaining to be forgiven after a decade has passed. Likewise, if you earn a lot and don’t qualify for reduced payments, you might have already paid off most or all of your loans in 10 years.

You can figure out where you stand by comparing different student loan repayment plans and calculating what your remaining balance will be after 120 payments. Our Public Service Loan Forgiveness calculator helps you estimate how much you could save through the program. Keep in mind, this calculator serves only as an estimate and doesn’t guarantee your eligibility or the amount of debt to be forgiven.

Along with crunching the numbers, don’t forget to take your career plans into account. If you’re drawn to a career in public service, this program could be the right move. On the other hand, it’s probably not worth committing a decade of your life to a career path that’s not the right fit just for the sake of loan forgiveness.

And if PSLF doesn’t seem like such a good idea on closer inspection, then check out other options for student loan forgiveness, as well as strategies to may repayment easier or cheaper, such as refinancing.

17Rebecca Safier and Jeffrey Trull contributed to this article.