Am I Eligible for Public Loan Forgiveness?
How does this work?
It’s called Public Service Loan Forgiveness.
If you work in the public service, a little-known government program called “Public Service Loan Forgiveness” could allow you to have all of your direct federal student loans forgiven, tax-free. Public Service Loan Forgiveness (PSLF) isn’t a payment plan, like Income-Based Repayment or Pay As You Earn; it’s a separate program that incentivizes a career in the public service.
To qualify for the program, you need to make 10 years of qualifying on-time payments (120 in total) toward your federal student debt. You must be working in the public service at least 30 hours a week (you can combine multiple part-time jobs to meet this requirement) beginning after October 1, 2007. After you make your 120th on-time payment, the U.S. Department of Education forgives your remaining federal student loan debt.
Many people using PSLF are also enrolled in an income-driven repayment plan to reduce their monthly payments until their debt is forgiven.
When Was Public Service Loan Forgiveness Created?
Congress created the program in October 2007 through the “College Cost Reduction and Access Act of 2007.”
Am I Eligible?
Do You Work in the Public Service?
Eligibility depends on whether or not you work for a qualifying public service employer. Put it another way, it doesn’t matter what you do, just who employs you. Qualifying public service employers include:
Employers That Will Not Qualify for Public Service Loan Forgiveness:
Partisan political organizations
Do You Work Enough Hours to Qualify?
In order to qualify for Public Service Loan Forgiveness, you have to work at least 30 hours a week at least eight months of the year. You are able to combine hours from multiple employers that qualify as public service employers.
Any time spent participating in religious instruction, worship services, or any form of proselytizing does not count toward your 30 hours a week.
hours per week
months per year
Does Your Loan Qualify?
One of the biggest barriers to enrollment in Public Service Loan Forgiveness is not having the right type of loan. Only Direct Loans are eligible for Public Service Loan Forgiveness.
There are different types of federal student loans, but as long as the word “Direct” appears in the name of the loan you should be good:
- Federal Direct Stafford/Ford Loans (Direct Subsidized Loans)
- Federal Direct Unsubsidized Stafford/Ford Loans (Direct Unsubsidized Loans)
- Federal Direct PLUS Loans (Direct PLUS Loans)—for parents* and graduate or professional students
- Federal Direct Consolidation Loans (Direct Consolidation Loans)
The types of loans that are not eligible for Public Service Loan Forgiveness are:
- The Federal Family Education Loan (FFEL) Program (which is what many students borrowed from until mid-2010)
- The Federal Perkins Loan Program
- Private student loans
If you don’t have a direct loan– there are still ways to get on the path toward debt relief through income-driven repayment plans and other types of loan forgiveness for some professions. In addition, you have the option to consolidate other types of federal loans into a Direct Consolidation Loan, which qualifies for PSLF. When you fill out the application to consolidate your loans, be sure to check the box that says you’re consolidating for the purpose of loan forgiveness.
*Parent PLUS loans have some special rules for PSLF. Parents who received a Direct PLUS Loan qualify for forgiveness if the parent — not the debtor on whose behalf the loan was taken out for — is employed in a public service job. Additionally, Parent PLUS loans cannot be repaid with an income-driven repayment plan (which are the eligible repayment plans that leave you with a leftover balance to forgive), but they can be consolidated into a Direct Consolidation Loan and then repaid in the income-contingent repayment plan.
Not to worry! You can visit the National Student Loan Data System to find out.
Does Your Repayment Plan Qualify?
It’s important that you pay back your student loans in an eligible repayment plan. Here are the repayment plans that are eligible for Public Service Loan Forgiveness:
- Standard 10-year repayment plan
- Income-Based repayment plan
- Pay As You Earn (or “New Income-Based Repayment”)
- Revised Pay As You Earn
- Income-Contingent Repayment Plan
To take advantage of Public Service Loan Forgiveness, you’ll also want to be enrolled in an income-driven repayment plan, otherwise there could be little to no balance left to forgive in the standard 10-year repayment plan. If you already have federal Direct Loans, you can submit an income-driven repayment plan application on StudentLoans.gov.
When it comes to repayment plans, you have a lot of options.
Do Your Payments Qualify?
In order to have your loans forgiven, you have to make 120 “qualifying” on-time payments. All that means is that once you receive your bill (which will say how much you owe and when you have to pay it by), you pay that amount by the due date or up to 15 days after.
These payments do not need to be consecutive. If you were to make 100 qualifying payments and then missed a month, you wouldn’t need to start over; the next on-time payment would be counted as 101. It’s important to note that if you pay your student loan early, it doesn’t count toward the 120 payments.
The good news is that this works retroactively, too! Any payments you’ve made on time, in a qualifying repayment plan, while working in the public service after October 1, 2007, will be counted toward your 120 total.
If you’re currently in default, you are not eligible for Public Service Loan Forgiveness.
Learn how you can get OUT of default and on your way to enrolling in a repayment plan that works for you.