There are two pathways to apply for nonprofit student loan forgiveness:
The PSLF Program is the original program that’s troubled borrowers since the beginning. It’s the one that less than 1% of applicants were approved to receive forgiveness under.
The Limited PSLF Waiver is a temporary expansion of PSLF. It provides the relief Congress tried to offer borrowers with the Temporary Expanded Public Service Loan Forgiveness Program (TEPSLF). From now through Oct. 31, 2022, applying for the PSLF Waiver will give you credit towards PSLF for any payments you made on your federal loans, regardless of your loan or the payment plan you were in.
PSLF and this limited waiver are part of the same forgiveness opportunity. The PSLF Waiver is simply an attempt by lawmakers to fix a broken program to give nonprofit and government employees the cancellation they deserve. The steps of applying are the same for both.
Learn More: Do Healthcare Workers Qualify for Student Loan Forgiveness?
Step 1 – Have the correct loans.
Only loans made under the Direct Loan Program are eligible for PSLF. You can consolidate other types of federal student loans — FFEL Loans and Perkins Loans — into a Direct Consolidation Loan to make them eligible for the program. Private student loans are never eligible. Learn how to consolidate student loans for PSLF.
Parent PLUS Loans, including Direct Consolidation Loans that paid off parent loans, don’t qualify for the limited waiver, but they are PSLF-eligible.
Loans that qualify for PSLF:
Direct Loans — including Direct Subsidized and Unsubsidized Loans, Grad PLUS Loans, and Parent PLUS Loans.
Federal Family Education Loans — Stafford Loans and Parent PLUS Loans if consolidated into a Direct Loan.
Perkins Loans — if consolidated into a Direct Loan.
Joint spousal consolidation loans made under the FFEL Loan program cannot be consolidated into a Direct Loan. Senator Sheldon Whitehouse of Rhode Island recently introduced a bill to allow those borrowers to reconsolidate their loans into a federal Direct Loan, but that legislation has not yet been made law.
Learn More: Parent PLUS Loan Forgiveness and Repayment Options
Step 2 – Work full-time for the right employer.
Your job title, description, or role with the nonprofit doesn’t change your eligibility. The only thing that matters is that the nonprofit you work for is a 501(c)(3) or provides a qualifying public service.
You have two options to discover if your nonprofit is eligible:
Full-time work is at least 30 hours per week. If you work for two nonprofit employers and your part-time work at both employers averages at least 30 hours per week combined, you may still qualify.
*MOHELA is replacing FedLoan as the vendor responsible for administering the PSLF Program. The switch is expected to finish by the end of the year.
Step 3 – Move to an IDR plan.
Most borrowers will save the most money by making all qualifying payments on one of the income-driven repayment plans. Even if you have a low income, you’ll always have a payment amount you can afford. But if you’re a high earner or have Parent PLUS Loans, your payments may be cheaper under the 10-Year Standard Repayment Plan. If that’s the case, you’ll pay back the full amount before you qualify for relief.
Step 4 – Make 10 years’ worth of payments.
You must make 120 monthly payments before you’re PSLF-eligible. The payments don’t have to be consecutive. You can pause payments with a deferment or forbearance and then make payments once you can afford to do so. You can also change jobs. For instance, you switch from a qualifying nonprofit to a job that doesn’t qualify. When you return to a qualifying employer or make payments again, you’ll pick up where you left off.
Two things to note.
First, student loan payments count toward PSLF only when they’re made while you’re working for a qualifying employer.
Second, as of August 2020, lump-sum and early payments made before your recertification deadline count toward the 120 needed for forgiveness. For example, if your monthly bill was $100 and you paid $1100, that would count for your next eleven payments.
Step 5 – Apply for student loan forgiveness.
After making your final payment, submit the PSLF application. You must keep working full-time for a qualifying employer when you apply.
If you didn’t certify your employment each year, submit an employment certification form for your current employer and each employer you had while making the 120 payments. You can skip this step if you’ve been at the same nonprofit employer since Oct. 1, 2007.
Once received, FedLoan Servicing will notify you. You’re not required to make payments while your application is processed. Any payments made over 120 will be refunded to you once the eligible loans are forgiven.