One of the most popular student loan programs out there is the Public Service Loan Forgiveness (PSLF) program — and it’s no wonder why. The program promises big rewards for student loan holders in the form of forgiving thousands of dollars in debt.
Yet, as with a lot of programs, the application requirements can be confusing. Additionally, there are questions about how long the program will remain intact.
Finally, you need to ask yourself if pursuing PSLF makes sense in your financial situation. Don’t fear—we’ve made it easy for you.
Here’s what you need to know to apply for the public service loan forgiveness program.
What Public Service Loan Forgiveness is worth
As of the writing of this blog post, the value of loan forgiveness is limited only by the amount of eligible loans that you’ve accumulated. (See below to learn about which loans are eligible.)
Of course, you’ll have to make 120 qualifying payments as part of the deal, so your balances could be significantly lower by the time you’re eligible. In many cases, it makes sense to get on an income-driven repayment plan. Otherwise, over the course of standard repayment, you’d be rid of your student loan debt after 10 years anyway.
Another consideration is that PSLF might not remain intact forever. There are various proposals on the table, ranging from President Trump’s budget to the PROSPER Act, that would end PSLF going forward.
1. Is Public Service Loan Forgiveness the right option for you?
Before you decide to go all-in with this program, be sure to consider how much in student loans you might have left to be forgiven after 10 years of repayment.
This program is most valuable if you have high loan balances relative to your salary. If your loan balances are low, however, then it’s unlikely that you’ll have much of your loans remaining to be forgiven after 10 years of payments.
If you earn a lot, then you might not qualify for reduced payments, which could also result in your having to pay off large amounts of your student loan balance in 10 years.
You can figure out where you stand by comparing different student loan repayment plans and calculating what your remaining balance will be after 120 payments. You can also check out our student loan calculators to make the math easy.
Not sure that Public Service Loan Forgiveness is the best option for you? Answer a few questions below and we can help point you towards a solution! Otherwise scroll down to read on.
2. What is the Public Service Loan Forgiveness Program?
The Public Service Loan Forgiveness Program is a federal program designed to forgive student loan debt for employees of certain public and nonprofit jobs.
The program applies to student loan debt holders in specific fields of work, with specific types of loans, and who make qualifying payments.
3. What are the requirements for eligible payments?
Right now, you’re probably saying, “Show me the money!” But it takes some work first.
To qualify, you need to meet two basic criteria: first, you need to be enrolled in a qualifying repayment plan, and second, you must have made 120 monthly payments.
The payment plans that qualify are:
- Revised Pay As You Earn (REPAYE)
- Pay As You Earn (PAYE)
- Income-Based Repayment (IBR)
- Income-Contingent Repayment (ICR)
- Standard repayment
- Any other payment plan with monthly payments that equal or exceed standard repayment monthly payments
No matter which plan you’re on, you’ll have to have made 120 monthly payments on time and in full to qualify. Additionally, only payments made after October 1, 2007 count as qualifying payments.
For many debt holders, REPAYE, PAYE, IRB, and ICR likely make the most sense for maximizing the amount forgiven at the end of the 120-month period. These plans are most feasible because they typically lower monthly payments, meaning you’ll have a larger balance remaining at the end of the period.
Additionally, the Standard repayment plan is designed to pay off your student loans in 10 years. So if you stay on this plan, there simply won’t be anything left to forgive after 10 years of payments.
With this in mind, the Department of Ed. notes that you must make the majority of your 120 payments under an income-driven plan in order to be eligible for PSLF. With this in mind, they say: “if you are seeking PSLF and are not already repaying under an income-driven repayment plan, you should change to an income-driven repayment plan as soon as possible.”
4. Which types of employment qualify for public service loan forgiveness?
The Public Service Loan Forgiveness Program is available only to employees of:
- Federal, state, local, or tribal government organizations
- A 501(c)3 nonprofit
- A not-for-profit that’s not 501(c)3 designated but meets other requirements related to public service
- AmeriCorps, in a full-time capacity, or the Peace Corps
What your specific job is typically doesn’t matter as long as the organization or agency falls into one of the above categories. However, if you perform work of a religious nature as part of your job at a qualifying organization, that doesn’t count toward the total hours.
You also don’t need to work for the same employer during the entire 120-month period. However, you must work an average of at least 30 hours per week each year, or at least the number of hours that your employer considers to be full-time work.
5. Which loans are eligible?
Loan eligibility is another area in which you have to be careful. Not all federal student loans qualify, so be sure that yours meet the requirements.
Public Service Loan Forgiveness eligible loans:
- Federal Direct Subsidized Stafford/Direct Loans
- Federal Direct Unsubsidized Stafford/Direct Loans
- Federal Direct PLUS Loans
- Federal Direct Consolidations Loans
Note that all of the above loans originate from the Direct Loan Program.
All Federal Perkins Loans and Federal Family Education Loans (FFEL) are not eligible for forgiveness.
Yet, there is one exception to loan ineligibility: if they’ve been consolidated into a Direct Consolidation Loan. If so, then they will become eligible. However, only payments made toward the new Direct Consolidation Loan will count toward your 120 payments. So, beware: this kind of “reconsolidation” can reset the count if you’ve made qualifying payments in the past.
Keep in mind that Perkins Loans can be eligible for other loan forgiveness programs, including Perkins Loan Cancellation.
What to do right now
Since this program didn’t begin until 2007, the first cohort is just being evaluated for PSLF right now. There are reports indicating that some borrowers have received notice of loan forgiveness, but the Department of Education says that fewer than 1,000 borrowers are likely eligible from this first round of applicants.
Here’s what to do if you’ve been making qualifying payments for 10 years:
First, complete the Employment Certification for Public Service Loan Forgiveness form each year. This form verifies that you have completed employment required for the program each year. Completing it requires you to fill in some parts and your employer to fill out the rest. While this isn’t a requirement, it is helpful for your servicer to track your eligibility.
In the case that you or your employer is unsure about any aspect of the program, then consult the guide compiled by the Consumer Financial Protection Bureau for answers to your questions.
Once it’s time to submit your application, keep in mind that at that time you’ll need to be working at one of the qualifying organizations above.
Additionally, realize that you submit everything at once — your whole 10-year employment history. Having filled out the employment form and tracked your payments each year can help the Department of Education make a decision faster.
Make sure to keep copies of your form each year just in case. You should also keep copies of pay stubs and W-2 tax forms in the case that you need them for verification later.
If you are interested in influencing policy, contact your representatives to let them know how you feel about PSLF. You can keep up with legislation related to student loans by following our bill tracker.
Public Service Loan Forgiveness calculator
Curious about how much debt you could have forgiven with PSLF? We developed a Public Service Loan Forgiveness calculator to help you estimate how much you could save through the program. Plug in your info below to find out.
Keep in mind, this calculator serves as an estimate only and doesn’t guarantee your eligibility or amount of debt to be forgiven. To learn more about how it works, check out our Public Service Loan Forgiveness calculator page.
Public Service Loan Forgiveness Calculator
Jeffrey Trull contributed to this article.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
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1 Important Disclosures for SoFi.
2 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.50% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.49% APR (with Auto Pay) to 7.27% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of April 17, 2019, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 04/17/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on our student loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.48% effective April 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.49% – 7.27%1||Undergrad & Graduate|
|2.49% – 6.65%3||Undergrad & Graduate|
|2.49% – 7.41%4||Undergrad & Graduate|
|2.50% – 6.65%2||Undergrad & Graduate|
|2.49% – 7.11%5||Undergrad & Graduate|
|2.98% – 9.72%6||Undergrad & Graduate|