What is Public Service Loan Forgiveness?
The PSLF program is a federal program that forgives up to 100% of your federal student loan debt if you work in a qualifying public service job. The program was created in 2007, as a way to help people in lower-paying government jobs to able to manage their student loan debt.
|Benefits of PSLF|
|Forgiveness After 10 Years (Is Retroactive)|
|100% Federal Student Loan Forgiveness|
|Forgiven Balance Not Taxable|
|Payments Based on Income|
Working in Public Service?
Student loan forgiveness after 10 years or 120 payment
See if you qualify for this program by giving us a call today!
Who Qualifies for Public Service Loan Forgiveness?
To qualify for PSLF, you must be employed full-time with an organization that is considered “qualifying employment”. Note that generally, the type or nature of your employment with the organization does not matter.
|Federal, State, Local Government|
|Non-Profit in Public Services||Maybe, see below.|
- Emergency management
- Military service
- Public safety, or law enforcement services
- Public health services, public education or public library services
- School library and other school-based services
- Public interest law services
- Early childhood education
- Public service for individuals with disabilities and the elderly.
The following organizations are not considered qualifying employment by PSLF:
- For-profit organizations, including for-profit government contractors
- Labor unions
- Partisan political organizations
- Non-profit organizations that are not exempt under Section 501(c)(3) and which don’t provide a public service.
In addition to qualifying employment, to qualify for PSLF, you must be employed full-time with that organization while making payments on your student loans. Full-time employment for PSLF is defined using your employer’s definition of full-time employment or at least 30 hours per week—whichever is greater.
- The type of work you do for your employer does not generally matter for PSLF purposes.
However, when determining full-time public service employment at a not-for-profit organization, you may not include time spent participating in religious instruction, worship services, or any form of proselytizing.
For teachers of other employees of a public service organization that is under contract for at least 8 out of 12 months, you meet the full-time standard if you work at least 30 hours per week during your contractual period.
What Types of Loans Qualify?
Only the following types of loan qualify for PSLF:
- Direct Subsidized / Unsubsidized
- Direct Consolidated Loans
- Direct PLUS
- Direct Stafford Subsidized / Unsubsidized
Private loans, loans in default, and federal loans not listed above do not qualify for PSLF.
What if My Federal Loans Don’t Qualify?
Fortunately, there is a way to convert your federal loans into Direct Loans so that they can qualify under PSLF. The Direct Loan Consolidation program works by taking all of your federal student loans and consolidating them into one new Direct Loan.
If you do not have Direct Loans but want to apply for Public Service Loan Forgiveness, you will need to consolidate your loans in this way. Consolidating your federal student loans is free if you apply on your own online at StudentLoans.gov or via paper application, or you can hire a private company to help you through the process.
Making 120 Qualifying Payments
One of the biggest reasons PSLF forgiveness is left unutilized every year is because qualified applicants fail to make qualified payments. If you think you’re qualified for PSLF, make sure you check in every year to make sure the payments you’re making on your student loans are qualified.
To qualify for loan forgiveness under PSLF, you must make 120 qualified payments that meet the following payment requirements:
- Payment was made after October 1, 2007;
- Payment was made on time (no more than 15 days after the due date);
- Payment was made in full (for the full amount shown on your bill). Payments that are made in a lump sum or in advance are not counted as qualifying payments;
- Payment was made while you were employed full-time with a qualified employer; and
- Payment was made under a qualifying repayment plan (see below).
PSLF And Qualified Repayment Plans
For your monthly student loan payments to count towards PSLF, they must be made under a qualified income-driven repayment program provided by the federal government. This is another way in which many people miss out on their opportunity to earn loan forgiveness through PSLF.
The loan repayment programs that qualify you for PSLF are the following:
- IBR (Income-Based Repayment)
- ICR (Income-Contingent Repayment)
- PAYE (Pay As You Earn)
- REPAYE (Revised Pay As You Earn
Any payment made under a Standard Repayment Plan or Graduated Plan will not count toward the 120 monthly payments needed to qualify for PSLF.
Temporary Expanded Public Service Loan Forgiveness
For a limited time, you could still be eligible for Public Service Loan Forgiveness even if some—or all—of your payments disqualify you under the standard requirements.
The Temporary Expanded Public Service Loan Forgiveness opportunity offered by the U.S. Department of Education temporarily amends the current program to include more borrowers.
The TEPSLF opportunity expands the list of repayment programs under which you can make your 120 required payments. While PSLF only accepts payments made under an IDR plan, TEPSLF also allows the following types of repayment plan:
- Extended Repayment Plan
- Graduated Repayment Plan
- Consolidation Graduated Repayment Plan
- Consolidation Standard Repayment Plan
If you’ve made payments that don’t qualify for PSLF, or if you’ve been denied PSLF because of nonqualifying payments, it’s important to learn more about the Temporary Expanded Public Service Loan Forgiveness opportunity and find out if you qualify.
Temporary Expanded Public Service Loan Forgiveness is a limited opportunity and will be distributed to applicants on a first come, first served basis, so it’s important to apply as soon as possible if you’re eligible.
Other Benefits of Enrolling in the Income-Based Programs
Under the income-based programs, your payments are calculated based on your income, not on how much you owe. This can often provide borrowers relief from large payments they are otherwise unable to make. In some cases, for those with very low income, the monthly payment could be as low as $0.00 per month depending on the income and family size of the applicant. The payment, regardless of how low it is (even $0.00), would count towards your forgiveness.
Working in Public Service?
Student loan forgiveness after 10 years or 120 payment
See if you qualify for this program by giving us a call today!
An Example of How Public Service Loan Forgiveness Can Work
A borrower is earning $40,000 per year with a family size of 4. The loan balance is $48,000, with an interest rate of 6.875%. The borrower could qualify for an income-based payment of $52/mo. After making 120 qualifying payments, this borrower would have paid $6,240 in student loan payments, and the balance of $48,000 – $6,240 = $41,760 would be forgiven.
This does not include interest that would also be forgiven and assumes that the personal income and family size did not change for ten years.
Public Service Loan Forgiveness Quick Checklist:
- Full forgiveness of Federal Student Loans after 10 years (120 qualified payments)
- Government or Non-profit employment 501(c)(3)
- Must be in the Direct Loan Program making income-based payments
- Forgiveness is non-taxable
Consider consolidating your loans to ensure you are making qualified payments
Public Service Loan Forgiveness FAQ
How Much Can Be Forgiven?
Currently, there is no maximum amount that can be forgiven under PSLF.
Is Public Service Loan Forgiveness Taxable?
No. Any amount forgiven under PSLF is not considered taxable income, making PSLF very different from income-driven repayment plans without PSLF.
What If I Have Two Jobs in Public Service?
If you work in two separate public sector or non-profit jobs, you are considered to meet the requirement for full-time employment if the combined hours at both positions is 30 hours or more per week.
Do Payments Have to Be Made Consecutively?
No. You must make 120 qualified payments for PSLF to work, but they do not have to be made consecutively. For that reason, it will take at least 10 years to qualify for PSLF, but it could take longer.
Is PSLF Being Cancelled? What Should I Do?
PSLF has been the topic of some controversy lately, and recent news may dissuade borrowers from attempting to apply or qualify for PSLF. However, having the right information can allow you to still benefit from this program.
Are the Qualifying Payments Retro-Active?
Yes! If you meet all the qualifying criteria of PSLF and have been making qualifying payments for ten years, you could qualify for loan forgiveness right now. There is no requirement to enter the PSLF program, only that you apply at the end of your ten years of qualifying employment, payments and having the correct loan types (see above).
PSLF In The News
The Department of Education is currently questioning the validity of many previous approvals for Public Service Loan Forgiveness submitted by FedLoan Servicing, even stating that borrowers may, in fact, see their approvals rescinded in the near future. Additionally, the current presidential administration could be making changes to the program.
This could result in many borrowers currently working in the public sector having their forgiveness benefits denied even after meeting all program requirements.
FedLoan PSLF Employer Certifications Wrongly Denied
With the filing of a lawsuit against the U.S. Department of Education by the American Bar Association (ABA) in late 2016 and 2017, it was discovered by many public service employees that they may not in fact qualify for the PSLF program. The ABA sought to hold the Dept. of Ed accountable for FedLoan employer certifications (which serve to inform federal employees whether or not their employer is qualified for PSLF qualifying employment).
As a result, the Department of Education has clarified that these letters from FedLoan are not binding, and the only way to find out if you qualify Public Service Loan Forgiveness is by submitting an official application. You can do so via studentaid.gov.
How To Apply For Public Service Loan Forgiveness
If you think you may qualify for PSLF, now is the time to act. Huge numbers of people who could take advantage of this great benefit are missing the opportunity by not making the correct qualifying payments. When it comes to applying for the Public Service Loan Forgiveness program, you have two different options.
- Apply On Paper – You will need to mail this application to U.S Department of Education, FedLoan Servicing, P.O. Box 69184, Harrisburg, PA 17106-9184. The easiest way to do the latter is to create an account on myfedloan.org and upload the form there.
- Apply Online – If your student loans are with Fedloan Servicing, you can submit your application online through their portal.
Compare the Best Student Loan Refinance Rates
Here are our top student loan refinance picks for 2019
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Student Debt Relief Loan Refinancing Advertiser Disclosure
College Ave: College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
College Ave Refi Education loans are not currently available to residents of Maine.
1 – The 0.25% auto-pay interest rate reduction applies as long as the borrower or cosigner, if applicable, enrolls in auto-pay and authorizes our loan servicer to automatically deduct your monthly payments from a valid bank account via Automated Clearing House (“ACH”). The rate reduction applies for as long as the monthly payment amount is successfully deducted from the designated bank account and is suspended during periods of forbearance and certain deferments. Variable rates may increase after consummation.
2 – $5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees. Information advertised valid as of 04/26/2019. Variable interest rates may increase after consummation.
3 – This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
ELFI: Subject to credit approval. Terms and conditions apply. To qualify for refinancing or student loans consolidation through ELFI, you must have at least $15,000 in student loan debt and must have earned a bachelor’s degree or higher from an approved post-secondary institution.
LendKey: Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
CommonBond: Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate.
Splash Financial: Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval.com
Earnest: To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest’s fixed-rate loan rates range from 3.89% APR (with autopay) to 7.89% APR (with autopay). Variable rate loan rates range from 2.50% APR (with autopay) to 7.27% APR (with autopay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms of 10 years or less. For loan terms of 10 to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 0.26% and 5.03% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of April 23, 2019 and are subject to change based on market conditions and borrower eligibility.
Auto Pay Discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 04/23/19. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice.
Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 303 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, e-mail us at firstname.lastname@example.org, or call 888-601-2801 for more information on our student loan refinance product.