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How the Public Service Loan Forgiveness Program works

With 99% of applicants rejected, make sure you understand what it takes to qualify.

Public Service Loan Forgiveness (PSLF) is one of the most popular forgiveness programs out there for student loans. Make 10 years of eligible repayments at a public service job and you could qualify to have the rest of your student debt forgiven.

But major miscommunication about how the program works has resulted in nearly all first-time applicants being rejected. That’s why it’s key to understand how it works as soon as you decide to apply.

What is Public Service Loan Forgiveness?

Public Service Loan Forgiveness is a federal loan program that cancels the debt of anyone who works a public service job for 10 years. It launched in 2007 as an incentive to encourage people with high-level degrees to work a low-paying job at a government agency or nonprofit. The government expanded the program in 2012.

Because it takes 10 years to qualify for PSLF, 2019 is only the third year that borrowers have been able to actually have their loans forgiven.

Is there a cap on PSLF?

There’s no limit to how much debt you can have forgiven, though the federal government has considered a cap. The current administration has also proposed getting rid of the program completely, though it’s safe for now.

How do I qualify for PSLF?

There are four main criteria you need to meet to qualify for PSLF:

  1. Have federal Direct Loans
  2. Work full time for a qualifying employer
  3. Sign up for income-driven repayments
  4. Make 120 qualifying repayments

How do I know if I have the right loans?

You must have a federal student loan from the Direct Loan Program. This includes:

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • TEACH Grants that were converted to Direct Unsubsidized Loans
  • Direct PLUS Loans for graduate or professional students
  • Direct Consolidation Loans
  • Special Direct Consolidation Loans

You can consolidate other types of federal loans under a Direct Consolidation Loan, but do this before you start making repayments toward PSLF. Otherwise, you’ll have to start over again, since consolidation gives you a completely new loan.

Which jobs qualify for PSLF?

Jobs with the following types of employers can qualify for PSLF:

  • Government organization — this includes federal, local, state and tribal government agencies, as well as public schools, the military and any other agency that receives public funding
  • 501(c)(3) nonprofit
  • Nonprofit that isn’t a 501(c)(3) but provides qualifying services

Qualifying services include emergency management, military service, public safety, law enforcement, legal services, early childhood education, services for seniors or people with disabilities, public health, public education, public library services and other school-based services.

Government contractors and partisan organizations aren’t considered qualifying employers. This means you can’t qualify if you work for a member of Congress, for example.

Employment status requirements

There are three types of employment statuses that qualify for PSLF:

  • Full-time employment. You must work full time as defined by your employer or at least 30 hours a week — whichever is higher.
  • Full-time teaching. In this case, what counts depends on your school’s policies.
  • Part-time employment. If you work for multiple qualifying employers for more than 30 hours a week, that also qualifies.

Which repayment plans qualify for PSLF?

You need to be enrolled in an income-driven repayment (IDR) plan to qualify for PSLF. Depending on which plan you choose, you pay between 10% and 20% of your monthly discretionary income. These include:

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

Any repayment you make on a different plan does not qualify for PSLF.

How student loan repayment plans work

What counts as a qualifying repayment?

A qualifying repayment is a repayment made under the following circumstances:

  • You have federal Direct Loans
  • You work for a qualifying employer full time or multiple qualifying employers part time
  • You’re enrolled in an IDR plan

Qualifying payments don’t need to be consecutive — you can take a break from the public sector and still qualify for PSLF later on. But they do need to be made after the program’s start date of October 1, 2007.

I’m struggling to meet payments due to COVID-19. Can I still qualify?

Yes — in fact, the federal government paused all federal student loan payments until September 30, 2021. And it still counts those months of paused repayments toward your requirement for PSLF. However, if you became unemployed during the pandemic — or are no longer performing qualified work — your payments or lack thereof won’t count toward the 120 required to be eligible for the PSLF.

Where to find relief on your student loans during the COVID-19 pandemic

How do I apply for PLSF?

Getting your loans forgiven through PSLF is a long process — it takes at least 10 years just to qualify. But if you’re thinking of applying, get started as soon as possible to maximize your eligibility potential.

  • Step 1: Make sure your job qualifies.
  • Step 2: Review your loans.
  • Step 3: Consolidate any ineligible loans.
  • Step 4: Sign up for an IDR plan.
  • Step 5: Submit your Employer Certification Form (ECF).
  • Step 6: Keep track of your payments and resubmit your ECF each year.
  • Step 7: Complete and submit the PSLF application.

Step 1: Make sure your job qualifies.

Check with your employer to make sure your job is eligible. Also, check to confirm you meet employment status requirements — that means working at least 30 hours a week. If your full-time employment is less than that amount, you can either request more hours or take on a part-time job that’s also eligible for PSLF to make up the difference.

Step 2: Review your loans.

Check your loans to make sure all are eligible before you sign up. You can do this by logging in to the account you use to make repayments. Or visit StudentAid.gov and log in with your FSA ID.

If you have any ineligible federal loans such as a Parent PLUS Loan or a Direct PLUS Consolidation Loan — a consolidation loan used for Parent PLUS Loans — you can still qualify as long as you consolidate with a Direct Consolidation Loan before you start making repayments.

Step 3: Consolidate any ineligible loans.

Skip this step if all of your loans are eligible. Otherwise, reach out to your servicer to take out a Direct Consolidation Loan. Consolidating your federal loans involves taking out a new loan to pay off all of your student debt and then making one monthly repayment each month.

Step 4: Sign up for an income-driven repayment plan.

The IDR plan that’s best for you depends on the type of loans you have, the degree they paid for and when you went to school. You can compare the different IDR plans you’re eligible for by using the repayment estimator on StudentLoans.gov.

Once you’ve decided on a plan, fill out the IDR Plan Request Form — you can do this on the same website. After you submit the form, continue making repayments on your current plan until you receive confirmation from your servicer that you’ve made the switch.

Step 5: Submit your Employer Certification Form.

After you’ve made a few repayments on your new IDR plan, submit your Employer Certification Form to make sure you’re not missing anything. You can get started on your ECF by using the Federal Student Aid (FSA) PSLF Help Tool on StudentLoans.gov. Or you can download the PDF and complete the form yourself.

Have the following information on hand before you get started:

  • W-2 form from your current employer or your employer’s employer identification number
  • Start date
  • End date — if applicable
  • Type of employer you work for — such as a government organization or nonprofit
  • Your employer’s tax-exempt status — if applicable

Once you complete the ECF, print and sign the form. Then bring it to your employer to sign before submitting it to FedLoan Servicing. The Department of Education will switch your loans to FedLoan Servicing once your first ECF is processed.

Who is FedLoan Servicing?

FedLoan Servicing is the servicer that handles all PSLF applications. You need to submit your first Employer Certification Form to FedLoan — even if you currently make repayments to another servicer.

Once you submit your ECF, FedLoan will let you know if any of your repayments are ineligible and keep track of your progress.

What to expect with FedLoan Servicing

Step 6: Keep track of your payments and resubmit your ECF each year.

Make sure you’re making full, on-time repayments until you reach that 120 mark. This means:

  • Paying the right amount. Look at your statement and make sure you’re paying the total amount due each month. If the total amount is $0, look at your statement and pay the installment amount due.
  • Paying on time. FedLoan must receive your repayment within 15 days of the due date for it to count toward PSLF.
  • Paying at the right time. Repayments made during your grace period, deferment, forbearance or while your loans are in default don’t count toward PSLF.

FedLoan recommends that you submit your ECF each year to make sure you’re making qualifying payments. The number of qualifying payments listed on your billing statement only increases each time you submit your ECF. Doing this now, rather than later, helps you stay on top of your repayments and alerts you to any mistakes right away. Otherwise, repayments you thought were eligible might not count.

Step 7: Complete and submit the PSLF application.

After you’ve made 120 qualifying repayments, you’re finally ready to submit your PSLF application. You can do this by using the PSLF Help Tool on StudentLoans.gov or by downloading the PDF and filling it out yourself. Both you and your employer need to complete sections of this form.

Once you’re done, you can submit your application by uploading it to FedLoan Servicing through your online account or by sending it via mail or fax.

Need help? Use these free resources

The Public Service Loan Forgiveness Program can be confusing. These expert tips on qualifying for PSLF can help set you up for success. And if you’re stuck on the application, use these resources from FSA and FedLoan:

PSLF Help Tool

The PSLF Help Tool is good for more than only filling out your ECF. You can also use it to:

  • Get a general overview of the program
  • Find out if your job qualifies
  • Find out if your loans qualify
  • Find out which PSLF forms you need to submit
  • Learn what actions you need to take to become eligible for PSLF, if you aren’t already

PSLF specialist helpline

If explaining your situation is the easiest option, you can reach out to someone who specializes in PSLF by calling the FedLoan helpline at 855-265-4038.

You never have to pay to apply for forgiveness or for help with the application. Stay away from any company that asks for money up front or guarantees acceptance to the PSLF Program. These are hallmark signs of a student loan scam.

What happens after I apply for forgiveness?

Submitting the PSLF forms are just one part of the process. Here’s what you can expect to happen next:

1. Your loans go into forbearance

Your student loans go into forbearance while FedLoan processes your application. In this case, you won’t have to make any repayments, but interest will continue to add up.

If your application is denied, that interest will capitalize — or get added to your loan principal — meaning you’ll pay back a larger amount than what you were responsible for prior to forbearance.

While the 2017 application offered an option to opt out of forbearance, the current application does not. If you’re interested in opting out of forbearance, call 888-256-4038 to ask about your options or visit FedLoan’s website.

2. FedLoan reviews your application

After you’ve submitted your PSLF forms, FedLoan lets you know it’s received your application. It might ask you or your employer to submit additional forms to verify your employment, such as a W-2 or pay stubs.

How long it takes to process depends on how many employers you’ve worked with and whether you submitted forms while working. Generally, submitting all your Employment Certification Forms at once can slow things down, which is why FedLoan recommends you do it annually. And the more employers or gaps in your payment history, the longer your application can take to process.

3. Find out if you’re approved — or denied

Once it’s processed your application, FedLoan lets you know whether your application is approved. If you get the green light, it forgives all eligible loans. You’re even refunded any payments beyond the required 120 you made to qualify.

If your application is denied, FedLoan provides a reason for its decision. You’ll continue paying off your loans, in addition to any interest that accumulated while your loans were in forbearance.

PSLF and income tax

In the past, the amount you have forgiven has been counted by the IRS as taxable income. However, with the American Rescue Plan Act in March 2021, this is no longer true.

Student loan forgiveness doesn’t count as gross income — which means it isn’t taxable. This lasts for almost all student loans, including those forgiven under PSLF, from December 30, 2021 to January 1, 2026.

I got rejected. Is there anything I can do?

There are a few options: Temporary Expanded Public Service Loan Forgiveness (TEPSLF) or continuing to make repayments and applying for PSLF again.

What is TEPSLF?

TEPSLF is a temporary program to help some PSLF applicants qualify for forgiveness. Congress created it when it passed the Consolidated Appropriations Act in 2018 after 99% of the first round of PSLF applicants were rejected.

You might qualify for TEPSLF if your application was denied because you didn’t sign up for the right repayment plan. There’s a limited amount of funds for this temporary program, so apply as soon as possible.

Why are so many PSLF applicants rejected?

The main reason for PSLF’s high rejection rate is miscommunication. Many student loan servicers and the Department of Education didn’t adequately inform the first round of participants what qualifies as an eligible repayment.

Many borrowers were also rejected because they had the wrong type of loan. The Department of Education says that many rejected applicants could qualify if they make a few more years of qualifying repayments.

Ask an expert: Will I still be eligible for forgiveness if they eliminate the PSLF Program?

Michael Lux

Michael Lux

Attorney and founder of The Student Loan Sherpa

Current borrowers will probably still be eligible for PSLF, even if it’s eliminated. The Master Promissory Note, which is the contract between federal borrowers and the government, includes language for the PSLF Program. If the program were eliminated, the government would be breaking the contract. This is one of the reasons proposals to limit or eliminate PLSF only apply to future borrowers.

Bottom line

Applying for PSLF involves a lot more than filling out an application. Stay on top of your repayments and submit your EFC each year to make sure you’re on track for forgiveness. And while PSLF is a popular forgiveness program, it’s not the only one out there. Explore your other options by checking out our guide to student loan forgiveness.

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