How to Qualify for Public Service Loan Forgiveness

The Public Service Loan Forgiveness (PSLF) program is a popular but flawed student loan forgiveness pathway that wipes out student debt for borrowers who enter public service careers, such as teaching, nursing, firefighting, public interest law, the military, law enforcement, and religious work.

From the beginning, the Public Service Loan Forgiveness Program has been marred by allegations of mismanagement, leading to lawsuits by state attorneys general and various organizations in the public sector.

Despite those issues, the PSLF Program still exists and will not go away any time soon. In the past year, the Biden administration has improved and expanded PSLF to allow more borrowers to qualify for cancellation of the remaining balance on their eligible loans.

Keep reading to learn how to qualify for Public Service Loan Forgiveness.

Step 1 – Have the right type of loans.

Only loans made under the Federal Direct Loan Program are eligible for PSLF. Private student loans aren’t eligible. Unfortunately, there’s no way to refinance or consolidate private student loans into federal student loans.

Other non-Direct Loans — Federal Family Education Loans and Perkins loans — are eligible for PSLF, but only if they’re consolidated into a Direct Consolidation Loan. You can apply for consolidation for free at studentaid.gov.

Learn More: How to Consolidate Student Loans for PSLF?

The Education Department recently announced that MOHELA will take over the processing of PSLF applications in 2022. All borrowers currently in the program will remain with FedLoan Servicing until they are transferred to MOHELA later this year.

Step 2 – Work full-time for a qualifying employer.

Your employer — not your job title — is what determines your eligibility for the program. Qualifying employers include:

• city, local, state, and federal government agencies

• school districts and charter schools

• active-duty military service

• 501(c)(3) non-profits

• ​non-profit organizations that provide a qualifying public service

• AmeriCorps or the Peace Corps

• religious organizations (but only for non-proselytizing work)

You can check if your employer qualifies by using the PSLF Help Tool or checking this PSLF employers list.

Note: Government contractors that work for a private company but at a government agency aren’t eligible for PSLF. The program’s rules require you to work directly for the government. Check out these other student loan forgiveness opportunities.

Step 3 – Choose the right repayment plan.

Unless you’re eligible for the temporary waiver, you must make your payments on a qualifying repayment plan, which includes the Standard 10-year plan or one of the income-driven repayment plans (IBR, ICR, PAYE, or REPAYE) to qualify for PSLF.

Most student loan borrowers will save the most money by making qualifying payments under an IDR plan. However, suppose you’re a higher earner, and the waiver pushes your payment count close to loan forgiveness.

In that case, your monthly payments may be cheaper under the Extended or Standard Repayment Plan.

Under the current PSLF rules, payments made while in the Graduated or Extended payment plans don’t count. However, payments made under those plans may still qualify under both the Temporary Expanded Public Service Loan Forgiveness and the PSLF Limited Waiver Opportunity.

Step 4 – Make 10 years’ worth of payments.

Loan forgiveness isn’t automatic because you’re a teacher, healthcare worker, law enforcement officer, or other type of public service worker. You have to make 120 student loan payments before you’re eligible for PSLF.

Under the current rules, PSLF payments must be made:

• within 15 days of your due date

• for the total amount due

Payments made while you’re in deferment, forbearance, or in default don’t count. Under the PSLF Waiver, active duty service members can get credit for the period when their accounts were in deferment or forbearance.

Your payments don’t have to be made consecutively. For example, you could make some qualifying payments, miss a few months, and then pick up where you left off. You can also change employers — including leaving public service and resume progressing towards PSLF.

Lump-sum future payments are allowed. As of August 2020, if all other program requirements are met, prepayments will count for up to 12 months or the next time you’re due to recertify to complete your annual recertification, whichever is sooner.

Step 5 – Apply for PSLF.

You can apply for PSLF after you make your final qualifying payment. To apply, submit the employment certification form to FedLoan Servicing, which oversees PSLF for the Department of Education.

If your PSLF application is approved, the remaining balance of your loans (including principal and interest) will be forgiven.

Note: The Education Department recently announced that MOHELA will take over the processing of PSLF applications in 2022. All borrowers currently in the program will remain with FedLoan Servicing until they are transferred to MOHELA later this year.

Not so long ago, the Education Department had different PSLF forms if you were certifying your employment for PSLF or applying for it or TEPSLF. Thankfully, the department discarded those forms and simplified the paperwork requirements. Now, borrowers will use the same form to do four things:

• Find out how many qualifying payments they’ve made.

• Learn if they work for a qualified employer.

• Certify employment — check the first box.

• Apply for PSLF or TEPSLF.

Once completed, send the PSLF form to FedLoan Servicing for processing — even if another company handles your loans. FedLoan will contact your current loan servicer and request that your loans be transferred so you can start getting credit towards PSLF.

Submit PSLF form by:

• Mail: FedLoan Servicing, P.O. Box 69184, Harrisburg, PA 17106-9184

• Fax: 717-720-1628

• Upload: https://myfedloan.org

The PSLF Employment Certification Form processing time is around six to eight weeks. You can check the status by calling FedLoan at 800-699-2908.

Have more questions? I’ve walked dozens of people through the process. Get my guide to PSLF Waiver: Guide to Applying for comprehensive answers and step-by-step instructions to take advantage of this limited opportunity.

Since its launch in 2007, the PSLF Program has been under fire for not delivering its promise to public servants. Only about 1% of applicants have been approved for forgiveness under PSLF.

The American Bar Association and the attorneys general for Colorado, Massachusetts, and New York have all filed lawsuits against loan servicers, alleging the companies hindered borrowers’ ability to take advantage of the program.

According to the FSA Data Center, as of 2019, 90,962 borrowers have submitted a PSLF application. Of those, only 862 have been approved.

The PSLF eligibility problems are two-fold:

First, the program has strict requirements which borrowers must meet every year.

Second, according to the Consumer Financial Protection Bureau, student loan servicers have engaged in systemic mismanagement of the PSLF Program. For instance, the CFPB found that servicers:

• gave incorrect information to borrowers

• improperly allocated monthly payments

• incorrectly calculated payment amounts

• misled consumers with older student loans (e.g., FFEL Loans) to believing they couldn’t access PSLF

Who’s gotten PSLF so far? According to Department of Education data, 8,429 borrowers have gotten forgiveness. That’s a tiny number compared to the 700,000+ borrowers who have applied for PSLF. The 8,429 figure includes 5,467 approved for PSLF and 2,962 for TEPSLF.

That means only 1.16% of all applications have ever been approved to have their student debt wiped out.

Public Service Loan Forgiveness has undergone two significant changes to fix it so that more borrowers would qualify for relief.

Temporary Expanded Public Service Loan Forgiveness (TEPSLF). Congress created the TEPSLF Program allows borrowers with Direct Loans to qualify for forgiveness if they made payments under the wrong student loan repayment plan. It does not give borrowers credit for Perkins Loans or FFEL Loans payments.

Public Service Limited Waiver Opportunity. The temporary limited PSLF waiver allows for a broader range of past payments to count towards loan forgiveness, including payments made on FFEL and Perkins Loans. You can click here to read about the PSLF update and how to apply. Note: Borrowers with Parent PLUS Loans aren’t eligible for the waiver.

Since the start of the Covid-19 pandemic, the Education Department has placed most federal student loans in default. As part of the payment freeze, borrowers working full-time for an eligible employer during those months will receive credit towards the 120 payments needed to qualify for PSLF.

In other words, even if you have not made a payment since March 2020, you will get PSLF credit through the end of the forbearance in May 2022 as if you had been making payments. As a result, you are more than 20 months closer to forgiveness.

No, Public Service Loan Forgiveness won’t be going away. But it will change in the future. In a statement released Oct. 6, 2021, Education Secretary Miguel Cardona announced that the Department would look to permanently improve the program through the negotiated rulemaking process in the coming months.

You’re not alone if you’re unsure whether you’re eligible for the PSLF Program. It’s a confusing program with many rules that you have to follow strictly. Schedule a free 10-minute call with me to see how I can help.

Also, if you’re interested in more expert student loan knowledge, sign up for my email newsletter for tips and tricks on navigating your student loan debt. After managing over 400 million in student loans, I promise to give you the best information out there.

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