What Repayment Plans Qualify for PSLF?

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Updated on September 12, 2023

The most crucial decision you can make when aiming for Public Service Loan Forgiveness (PSLF), aside from ensuring all your federal student loans are Direct Loans, is selecting the right repayment plan.

Your goal should be to choose a plan that offers the lowest monthly payment while preventing your interest from ballooning.

The Save on a Valuable Education Plan (SAVE) is your best bet for achieving these objectives.

Ahead, we’ll break down which repayment plans are your golden ticket to PSLF.

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What Repayment Plans Qualify for PSLF?

Qualifying for Public Service Loan Forgiveness depends on enrollment in an eligible repayment plan. Below is a list of approved repayment plans:

  • 10-Year Standard Repayment Plan: Fixed payments for 10 years.

  • Income-Driven Repayment Plans: Payments are based on your income and family size.

Ahead, we’ll dive into how to choose the best PSLF plan to get the lowest qualifying monthly payment amount year after year.

Do You Have to Be on an Income-Driven Repayment Plan for PSLF?

While income-driven plans are not a strict requirement for PSLF, they are often the most beneficial. Choosing one can maximize your PSLF benefits by offering lower monthly payments. This leaves a larger loan balance to be forgiven in the end. The 10-year Standard Repayment Plan also qualifies but usually doesn’t offer the same financial flexibility.

Income-Driven Repayment and PSLF

Income-Driven Repayment Plans are a group of four plans the U.S. Department of Education offers federal student loan borrowers. These plans not only make payments more affordable, but they also help meet the eligibility requirements for different loan forgiveness programs, including PSLF.

Eligible Income-Driven Repayment Plans

  • Save on a Valuable Education Plan: This is the newest income-driven plan, designed to replace the Revised Pay As You Earn Plan (REPAYE).

  • Pay As You Earn Plan (PAYE): Suitable for newer loans and borrowers with a high debt-to-income ratio.

  • Income-Based Repayment Plan (IBR): Good for those with older loans and potentially higher incomes.

  • Income Contingent Repayment Plan (ICR): The most flexible but often results in higher payments.

Related: Are Parent PLUS Loans Eligible for Income-Based Repayment?

Advantages of IDR Plans in PSLF

  1. Lower Monthly Payments: IDR plans often result in lower monthly payments compared to the 10-year Standard Repayment Plan.

  2. Maximized Forgiveness: Lower payments mean a larger remaining balance, which could result in more debt being forgiven under PSLF.

What is the Best Repayment Plan for PSLF?

So you want to get the most out of PSLF, right? The “best” repayment plan for you hinges on two things:

  • Monthly Budget: How much can you comfortably pay each month?

  • Forgiveness Goal: Are you aiming to get the maximum amount forgiven?

Top Pick: The SAVE Plan

Among the income-driven options, the SAVE Plan usually comes out on top for PSLF. Here’s why:

  • Lower Monthly Payments: The income threshold is higher, so you’ll likely pay less each month.

  • Interest Waiver: Extra interest? Not your problem. It gets waived.

  • Spousal Income: Married but want to keep your spouse’s income out of the equation? You can.

Remember, the goal is to minimize your monthly payments to maximize the amount forgiven. That’s why the SAVE Plan often wins the race.

Does Standard Repayment Plan Qualify for PSLF?

Yes and no—details matter here. The 10-year Standard Repayment Plan is PSLF-eligible. But if you’ve consolidated your loans, the Standard Repayment Plan for Direct Consolidation Loans usually won’t qualify. Here’s why:

  • Extended Timeline: This plan often stretches repayment beyond the standard 10 years.

  • Non-Qualifying Payments: Payments on this plan usually won’t count toward the 120 needed for PSLF.

In short, if you’re on the Standard Repayment Plan for Direct Consolidation Loans, you’re likely not eligible for PSLF.

Related: How to Consolidate Student Loans for PSLF

Is Graduated Repayment Plan Eligible for PSLF?

No, Graduated Repayment Plans are not eligible for PSLF. While there has been some debate about forgiveness relief for these plans, as of March 2023, they remain ineligible for the PSLF program.

Does Extended Repayment Plan Qualify for PSLF?

No, payments made under the Extended Repayment Plan do not qualify for PSLF. While some sources may list this plan among others, it’s crucial to note that it is generally not a path toward Public Service Loan Forgiveness.

Can You Switch Income-Based Repayment Programs and Still Get PSLF?

Yes, you can. Switching between different income-driven repayment (IDR) plans will not disqualify you from PSLF. Your monthly payments will continue to count toward the 120 payments needed for forgiveness as long as they are made under an eligible IDR plan.

Can I Change Payment Plans for Federal Loans While on PSLF?

Yes, you can change your repayment plan at any time while pursuing PSLF. To do so, contact your loan servicer to discuss your options and make the change. Only payments made under qualifying plans will count toward PSLF.

Does Changing the Student Loan Payment Plan Affect PSLF?

Generally, no. Switching between qualifying repayment plans rarely affects your PSLF eligibility. But be cautious of the following:

  • Capitalization of Interest: When switching out of certain plans like REPAYE, any unpaid interest will capitalize, although this is irrelevant if you’re aiming for PSLF.

  • Administrative Forbearance: Sometimes, your account may be placed in forbearance for a month during the switch, slightly delaying your progress toward PSLF.

Related: Does Forbearance Count Toward PSLF?

Bottom Line

Choosing the right repayment plan is not just about meeting eligibility requirements; it’s about making the Public Service Loan Forgiveness program work for you.

Whether you pick an income-driven plan or stick with the 10-Year Standard Repayment Plan, the ultimate goal is to reduce your monthly payment amount while setting yourself up for maximum forgiveness.

Don’t forget to confirm that your qualifying employer and full-time work status align with PSLF guidelines.

Ready to take the next step? Visit StudentAid.gov to use the PSLF Help Tool, or speak with MOHELA to ensure you’re on the path to financial freedom.

Key Terms

  • Eligibility Requirements: The criteria you must meet to qualify for PSLF include having a federal student loan under the Direct Loan Program and working for a qualifying employer.

  • Qualifying Employer: An organization that meets the requirements set by the federal government for PSLF. This often includes government organizations, military service, and not-for-profit organizations.

  • Qualifying Payments: These are payments you make within 15 days of the due date. To count, you need to be on an eligible student loan repayment plan and be working full-time for a government or non-profit.

  • Monthly Payment Amount: The sum you are required to pay every month under your chosen repayment plan.

  • Federal Student Aid: Financial assistance is provided by the federal government, often through unsubsidized loans, Direct PLUS loans, or Federal Perkins Loans.

  • Full-time: Working at least 30 hours per week or meeting your employer’s definition of full-time employment.

  • PSLF Servicer: MOHELA is the go-to company for handling your student loans and PSLF To kick off your application, you’ll need to send your PSLF Form their way.

  • Direct Loan Program: The federal student loan program under which most new loans are originated. This program is distinct from the FFEL Program and Federal Family Education Loan

  • Income-Contingent Repayment: One of the four income-driven repayment plans, often resulting in higher payments than other income-driven plans.

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Do All Repayment Plans Qualify for PSLF?

No, not all repayment plans qualify for Public Service Loan Forgiveness. While the 10-year Standard Repayment Plan is eligible, the Standard Repayment Plan for Direct Consolidation Loans does not qualify for PSLF. It's crucial to be enrolled in a qualifying plan to be eligible for loan forgiveness.

Can You Make Multiple Payments on PSLF?

No, making multiple payments won't speed up your eligibility for PSLF. You must make 120 separate monthly payments to qualify. Extra payments may be applied to future payments, but they won't count as more qualifying payments toward the 120 needed for PSLF.

Does Income-Driven Repayment Plan Qualify for PSLF?

Yes, income-driven repayment plans are among the eligible options for PSLF. Being on one not only makes you eligible but often results in lower monthly payments, thereby maximizing the amount forgiven under the program.

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