Employees of nonprofit and state universities qualify for the Public Service Loan Forgiveness Program — no matter their job title.
Working at a university is considered public service if it’s a state or nonprofit school. Those types of schools and colleges qualify for the Public Service Loan Forgiveness Program — a program that promises tax-free forgiveness after 10 years’ worth of work and payments.
On the other hand, for-profit schools aren’t eligible employers for PSLF.
You can find out whether your university meets the eligibility for public service forgiveness by using the PSLF Help Tool on the Federal Student Aid website, studentaid.gov. You’ll need your school’s Employer Identification Number to use this tool. You can find it on your W-2 in box b or ask your employer for their EIN.
During the pandemic, the U.S. Department of Education made two significant but temporary changes to the PSLF Program.
First, it put most federal student loans in forbearance, froze the interest on those loans, and gave borrowers credit toward public service forgiveness and income-driven repayment plan forgiveness.
Second, the department implemented a limited waiver through October 31, 2022, of the unnecessarily complex rules that prevented many people who worked in qualifying public service jobs from getting their loans wiped out.
Keep reading to learn how you can benefit from those changes and get PSLF while working at a public or private university.
Full-time employees of state schools or tax-exempt private colleges can get their remaining balance forgiven after making 10 years’ worth of qualifying monthly payments — no matter their role at the university. Administrators, professors, provosts, and so on can have their entire federal student loan debt wiped out tax-free so long as they work full-time and make 120 monthly payments under a qualifying repayment plan like income-based repayment.
To apply, you just need to inform the loan servicer responsible for administering the program, MOHELA,* that you work for a public service employer. You do that by submitting an employment certification form. That form documents your start date and whether you’re a full-time or part-time employee.
* FedLoan Servicing used to administer the PSLF Program for the Education Department, but it’s ending its contract. As of this July, all public service paperwork goes to MOHELA.
Do private universities qualify for Public Service Loan Forgiveness?
A private university can be a PSLF employer if it is a nonprofit organization. Many private schools are registered with the IRS as an 501(c)(3) not-for-profit organizations. But some schools — DeVry University, University of Phoenix, Berkeley College, and so on — are for-profit institutions that don’t qualify for the public service program.*
Use the PSLF Help Tool to check whether your school qualifies for the program.
Issues getting PSLF
The most significant hurdle university employees have in getting PSLF is having the right type of loan. Not all federal student loans are eligible for the program. Only loans made under the Federal Direct Loan Program qualify for PSLF, including:
Direct Subsidized and Unsubsidized Loans.
Direct Graduate PLUS Loans.
Direct Parent PLUS Loans.
Direct Consolidation Loans.
Depending on when you went to school, you may have loans that don’t automatically qualify for PSLF — even though you work for a qualifying employer. All isn’t lost if you have the wrong type of loan for the program. You can still gain access to it by consolidating those loans into a Direct Loan.*
And if you move quickly, you can take advantage of a set of temporary rules rolled out last October that will push you closer to having your loan balance forgiven. More on that limited waiver below.
* Private student loans aren’t eligible for PSLF and can’t be consolidated into a Direct Loan.
Ordinarily, borrowers seeking to get their loans forgiven under the Public Service Loan Forgiveness Program must have the right type of federal loan, make 120 on-time payments, enroll in the correct category of repayment plans and work full-time for an eligible employer.
Those complex rules combined with sloppy customer service from the companies charged with helping student loan borrowers led to more than 98 percent of applications being rejected.
Last year, the Biden administration implemented a temporary solution that enabled hundreds of thousands of borrowers to receive the relief they had been promised. The Limited PSLF Waiver gives borrowers credit for payments made to the wrong types of loans — i.e., Federal Family Education Loans and Perkins Loans — and under the wrong repayment plan. It also counts time spent in long forbearances and certain deferments.
The waiver application deadline is October 31, 2022.
The Education Department will continue to process timely submitted applications. But if you apply after the deadline, you’ll miss out on this one-time opportunity.
University employees shouldn’t have trouble getting their loan balance forgiven under the PSLF Program. But you need to ensure you have the right type of federal student loans and are enrolled in an eligible repayment plan. You should also document your employment using the proper form, so there aren’t any issues down the road.
Let’s talk if you want help getting rid of your student debt.