Dear Student Loan Hero: Am I on Track for Public Service Loan Forgiveness?

public service loan forgiveness

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If you made a word cloud of 2017’s most-searched student loan topics, Public Service Loan Forgiveness (PSLF) would have to be prominent.

In fact, during the week this column was being prepared, about 40 percent of the 195 reader questions we received contained the phrases “Public Service Loan Forgiveness” or “PSLF.”

That popularity is partly because PSLF promises so much. It could wipe out the student loan debt of many public and nonprofit employees.

5 common questions about Public Service Loan Forgiveness

There’s a second reason for the flood of questions about PSLF. The program — although pretty black and white in its requirements — leaves some gray area for borrowers. For example, you must work in public service to qualify for PSLF, but only the loan payments you make while working full time help you achieve it.

The first PSLF applications just became available in September. It’s still a relatively new program, leaving many potential applicants wondering if it’s a fit for them.

Due to the heightened interest, we’re focusing our latest Dear Student Loan Hero column on not one question but five of them. They’re more common than they might sound.

1. Am I on track for PSLF?

The majority of PSLF questions are from readers who don’t yet qualify. That’s because PSLF was created in 2007 and requires 10 years (or 120 months) of timely loan payments.

Some borrowers are just learning about it now. One wrote to us, “I have worked as a school nurse in a public school system for chronic children for the last two years. I was wondering if this setting would qualify for loan forgiveness.”

Provided you meet other requirements, government employees of all sorts are eligible for PSLF. After all, public schools are government entities.

But don’t take my word for it. No matter how far along you are in repayment, fill out the PSLF Employment Certification form. Only then will you know whether your employer could eventually earn you loan forgiveness.

2. Do older payments count toward PSLF?

Relatively new student loan borrowers aren’t alone in wondering if they’ll one day receive forgiveness. There are also borrowers in their 50s and 60s with the same sorts of questions.

One woman wrote to us about her situation: “I work at a nonprofit school. I have for 17 years. My loan [has] doubled over 25 years even though I’ve paid off the $29,000 principal because I put the loan in [forbearance] when I worked part time. I need help finding out how to get info on loan forgiveness given the nonprofit status of my workplace. Please help.”

Unfortunately, only payments made after Oct. 1, 2007, are eligible for PSLF. Also, you must work full time for your eligible employer during repayment.

To this reader, I’d say to complete the PSLF Employment Certification form. In fact, fill it out for each year that you were both employed full time by your nonprofit school and made timely payments on your loan. That will give you the best sense of how much further you’d have to go to achieve PSLF.

It’s also possible that PSLF isn’t the best route to forgiveness. You mentioned that you have been in repayment for over 25 years but were interrupted by a forbearance. If you’re on an Income-Based Repayment plan, you could qualify for forgiveness after 25 years of payments.

3. Is my repayment plan eligible for PSLF?

When you took out your federal student loans, you received a 10-year Standard Repayment Plan. You could have switched to an income-driven repayment (IDR) plan to lower your monthly payments to a percentage of your discretionary income.

Fortunately, IDR plans are PSLF eligible. But that hasn’t stopped confusion.

One mother of a borrower messaged us about her son. He has worked for a nonprofit for five years, she said, but he’s been told he wasn’t eligible for PSLF because he was under the Standard Repayment Plan. The mother asked about receiving “credit” for his half-decade of payments and switching to an eligible plan.

A Standard Repayment Plan is eligible for PSLF. But if it’s the 10-year plan you were assigned as a student, you might not have a balance left to forgive. After all, PSLF requires making 10 years of timely payments.

That means our concerned mother is likely referring to the Standard Repayment Plan associated with Direct Consolidation Loans. Unfortunately, payments made via that Standard Repayment Plan don’t qualify for PSLF.

To echo the Department of Education (DOE), you should switch to an IDR plan as soon as possible if you’re seeking PSLF. You can learn more about applying at StudentLoans.gov.

4. Is my career eligible for PSLF?

One of the surprising requirements of PSLF is that it’s your employer (not your job) that has to gain eligibility.

The school nurse who asked if her workplace qualified for forgiveness isn’t unique. Our customer support team often receives questions about workplace eligibility. Recent graduates message us wondering if they should switch employers. Older readers think about leveraging their past work experience.

Less frequently, something like this happens: A woman read our post about unusual careers that qualify for PSLF, saw call center representative listed, and asked if she too was eligible for PSLF.

“I work in customer service for an utility company and do emergency calls, electric and gas leaks, etc.,” she wrote. “Can I qualify for student loan forgiveness?”

For this reader, the employee-employer distinction is worth pointing out. For her to receive forgiveness, her utility company would have to be a government or nonprofit organization.

The DOE also clarifies that volunteering full time (as a call center rep or in another role) for Americorps or Peace Corps qualifies. But working full time for for-profit organizations, including for-profit government contractors, doesn’t qualify.

5. Is PSLF going away?

For readers who learn they could be eligible for PSLF, the next natural question is whether the program will be around long enough to benefit them.

One reader put it best: “Is PSLF still in effect? I’m hearing conflicting information that’s it’s being cut out.”

There were over half a million borrowers on track to receive forgiveness when the Trump administration first proposed ending PSLF in May, according to The Washington Post. That sounded alarm bells initially.

Fortunately, it became clear the PSLF program’s potential closure would only affect new borrowers. Simply put: If you borrowed a federal loan before July 1, 2018, you’ll remain eligible to apply for PSLF.

Keep seeking clarity on Public Service Loan Forgiveness

PSLF could do a whole lot of good for your student loan situation. But it’s not the right path for every borrower. As you consider how the program fits your situation, assume nothing.

The PSLF requirements are clear, but they don’t always apply seamlessly to borrowers’ situations. Hopefully, these answers helped you figure out what’s best in your case.

If you have a student loan question you’ve been waiting for an answer to, contact our customer support team. Your question might end up in this column.

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