What Repayment Plans Qualify for PSLF?

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Stanley Tate

#1 Student Loan Lawyer

Updated on June 30, 2022

Public Service Loan Forgiveness discharges any remaining balance for Direct Loan Program Loans after 10 years of payments under a qualifying repayment plan.

The Education Department will write off your student loan debt tax-free after a decade of working full-time for the government or a nonprofit organization, but only if you made your payments on the standard 10-year plan or one of the four income-driven repayment plans.

Repayment plans that qualify for PSLF:

  • 10-year Standard Repayment Plan

  • Income-Based Repayment Plan (IBR)

  • Income-Contingent Repayment Plan (ICR)

  • Pay As You Earn (PAYE)

  • Revised Pay As You Earn (REPAYE)

When you leave college, your student loan servicer will automatically enroll you in the standard 10-year plan unless you choose a different plan. To maximize the forgiveness opportunity, you’ll want to complete the Income-Driven Repayment Plan Request form and choose the repayment option that gives you the lowest monthly payment amount.

Each IDR plan caps payments to between 10% and 20% of your discretionary income and family size. The plans also forgive your remaining loan balance after 20 or 25 years of payments, depending on whether you borrowed federal student loans for graduate school. Read more about income-driven repayment forgiveness.

Note: Typically, deferment, forbearance, and bankruptcy statuses aren’t eligible for credit toward PSLF. But throughout the Covid-19 pandemic, the Education Department has given student loan borrowers credit toward the 120 monthly payments needed for PSLF so that the payment pause wouldn’t increase the time to qualify

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What payment plans don’t qualify for PSLF?

Payments made on the Graduated, Extended, or Income-Sensitive plans rarely count toward PSLF. Instead, borrowers can benefit from the Limited PSLF Waiver and Temporary Expanded PSLF to be given retroactive credit for those payments.

Download the PSLF Form

Repayment plans that don’t qualify for PSLF:

  • The Standard Repayment Plan for Direct Consolidation Loans

  • Extended Repayment Plan

  • Graduated Repayment Plan

  • Income-Sensitive Repayment

Does the Standard Repayment Plan qualify for PSLF?

The Standard Repayment Plan for Direct Consolidation Loans typically has a repayment term of 20 years or more, which is double the standard 10-year plan. The longer repayment term results in a monthly payment lower than the monthly payment amount required under the 10-year plan. Thus, payments made under the standard plan for consolidation loans would qualify if the repayment period was no more than 10 years.

Why doesn’t the Income-Sensitive Repayment Plan qualify for PSLF?

Like IDR, the income-sensitive plan lets borrowers with Federal Family Education Loan Program Loans pay based on their annual income. This plan doesn’t qualify for PSLF because lawmakers didn’t designate it as one of the income-driven repayment plans. Plus, it’s only eligible for FFEL Program Loans, and those loans don’t qualify for the public service forgiveness program.

What’s the difference between a PSLF eligible payment vs. a qualifying payment?

A PSLF eligible payment becomes a qualifying payment after you certify your employment and your employment period is approved. Remember, a qualifying monthly payment is a payment you make after Oct. 1, 2007, under a qualifying repayment plan for the amount due within 15 days of the due date while working full-time for the government or a non-profit organization.

Can you switch repayment plans on PSLF?

You can change your student loan repayment plan as often as needed while working towards PSLF, but depending on your income, not all repayment options may be available.

As your income increases, the repayment plans available to you become fewer, and switching plans becomes harder. For example, to enter into the IBR plan, you must have a partial financial hardship, which means your payment under IBR must be lower than the 10-year plan. If your income is high relative to your loan balance, switching to IBR may not be an option.

Similarly, suppose your income has jumped since you first enrolled in the PAYE or REPAYE plans. Federal regulations* will block you from switching to the 10-year plan and still qualifying for PSLF.

Complete the IDR request form to change plans and signify you want to change to a different IDR plan.

34 CFR 685.210(b)(2)(ii).

Eligibility requirements for PSLF

  • Work full-time for a qualifying employer. Visit the Federal Student Aid website, studentaid.gov, and use the PSLF Help Tool to search the employer database by name or using your employer’s EIN from your W2.

  • Have Direct Loans. Only loans made under the Direct Loan Program qualify for PSLF. FFEL Loans, Federal Perkins Loans, and private student loans aren’t eligible. You can make FFEL and Perkins Loans PSLF eligible by consolidating the loans into a Direct Consolidation Loan. If you do that before Oct. 31, 2022, you can apply for the PSLF Waiver and get retroactive credit for payments you made while working in public service.

  • Enroll in a qualifying repayment plan. You can choose any of the four IDR Plans.

  • Make 120 qualifying payments. You must make 10 years’ worth of payments while working for a qualified employer. The payments count toward PSLF if they were made for the amount due, on time, and on a qualifying repayment plan.

You can apply for PSLF by completing an employment certification form and sending it to MOHELA, the contractor that has begun administering the program for the U.S. Department of Education. When the form is processed, your loans will be transferred to MOHELA to be serviced. Read more about the PSLF Program requirements.

MOHELA replaced FedLoan Servicing as the company that handles PSLF loans after the latter announced it would end its contract with the department by December 2022.

UP NEXT: How to Apply for Student Loan Forgiveness

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