You’ve worked hard as a public servant since you finished school.
You’ve dutifully paid your student loans each month with the hope that the government would take care of the remainder.
And finally, after 10 long years, you’re ready to apply for loan forgiveness.
Here’s how to complete the Public Service Loan Forgiveness form — and tips to make sure you qualify.
What is the Public Service Loan Forgiveness Program?
The Public Service Loan Forgiveness (PSLF) Program launched in 2007. Its promise: If you pay your loans each month while working at a government or nonprofit agency, the remainder will be forgiven after 10 years.
Unfortunately, the execution has been far from smooth. In July, the Consumer Financial Protection Bureau (CFPB) reported that many loan servicers have been mishandling PSLF for their borrowers. Others have been critical of the cost of PSLF, and there’s been speculation the PSLF Program might be discontinued in 2018.
Regardless of future changes to the program, people already pursuing PSLF should remain eligible — and September 2017 was the first time any borrowers were eligible to apply for PSLF.
How to complete the Public Service Loan Forgiveness form
If you’re one of those borrowers, then it’s time to apply for PSLF.
The first step is completing this form. You’ll need to fill out the Public Service Loan Forgiveness application for each employer you had while making your 120 qualifying payments.
Unless you indicate otherwise, the Department of Education will put your loan in forbearance while it processes your application. During this period, you won’t have to make payments. Your loan will accrue interest, however, which you’ll have to pay if your application is denied.
After you complete the PSLF application, you can submit it via mail — or upload it directly to FedLoan’s site if FedLoan is your servicer. Addresses and instructions are on Page 4 of the application, where you’ll also find numbers to call for further assistance.
Once the Department of Education has received all your documentation, it will notify you. According to its PSLF FAQ page, processing times can vary based on factors such as:
- Whether you submitted Employment Certification forms over the years (if you did, it said your application “will likely be processed more quickly”)
- The number of employers you had
- Gaps in your employment or payment history
If your application is approved, the Department of Education will forgive all outstanding interest and principal on your eligible Direct Loans. If you made more than 120 qualifying payments, the extra amount will be refunded to you.
And you won’t have to pay taxes on the amount that’s forgiven, unlike some other forgiveness programs.
If, however, your application is denied, the Department of Education will notify you with the reason.
At that point, you’ll have to start paying your loans again. You’ll be responsible for any interest accrued during forbearance, and, as the Department of Education warned, that interest “may be capitalized.” That means the interest could be added to your principal, forcing you to make payments on a higher amount than you started with.
If you believe the Department of Education is mistaken, you can submit additional information that supports your case, and FedLoan Servicing will re-evaluate its decision.
Make sure you qualify for Public Service Loan Forgiveness
It’s important that you don’t apply for PSLF until you’re sure you qualify.
Putting your loans into forbearance could be an expensive mistake if your Public Service Loan Forgiveness application is denied. During the processing period, you’d also miss out on many months of making qualifying loan payments.
So, before you fill out the PSLF form, make sure you can check each of the four boxes below.
1. You have Direct Loans
Although there are many types of federal student loans, only Direct Loans are eligible for PSLF.
To check which types of loans you have, you can sign up for our student loan dashboard. If it says “Direct” below your loan, then it’s eligible for PSLF.
If you have several types of federal loans, you can consolidate them into a Direct Consolidation Loan so they’ll qualify — but your prior loan payments won’t count. In other words, the clock on your 120 payments will start over. So, think carefully before you do it.
Are your loans Direct Loans? If yes, keep going. If no, learn more about Direct Loan Consolidation.
2. You’re on an income-driven repayment plan
When you graduate from school, you’re automatically put on a standard 10-year repayment plan. But that wouldn’t work for PSLF; at the end of 10 years, there’d be nothing left to forgive.
So, you must be enrolled in an income-driven repayment (IDR) plan that sets your payments to a percentage of your income. If your payments drop as low as $0, that’s fine — but you must be on one of these plans.
Are you enrolled in an IDR plan? If yes, keep going. If no, learn more about income-driven repayment plans.
3. You work full time at a qualifying employer
Your job is what qualifies you for PSLF. You must work your employer’s definition of “full time,” or at least 30 hours per week, for a nonprofit or government agency.
To track your employers, you should send an Employment Certification form each time you switch jobs. And to prove your employment, the Department of Education suggested retaining W2s and pay stubs.
It’s important to note you must be working for a qualifying employer at the time of your application and at the time of forgiveness, according to the Department of Education. So, don’t join the private sector until your loans have been forgiven.
Did you work full time at a qualifying employer at the time of your 120 payments, and are you still working at one now? If yes, keep going. If no, learn more about qualifying public service careers.
4. You’ve made 120 qualifying payments
Lastly, you must’ve made 120 qualifying monthly payments. They must’ve been made after Oct. 1, 2007, in full and within 15 days of the due date and while you were on an IDR plan and working for an eligible employer.
The payments don’t have to be consecutive, though. If you, for example, were employed in the private sector between nonprofit jobs, you can count the payments you made on either end.
If you’re not sure how many qualifying payments you’ve made, you can log on to the FedLoan Servicing site to check. If your loans haven’t been moved over yet, you can submit the Employment Certification form — after which the DOE will send a letter revealing how many payments you have left.
Did you make 120 qualifying payments? And did you answer “yes” to all the questions above? Then you’re ready to apply for PSLF!
Take your time when you complete the Public Service Loan Forgiveness form, keep copies of everything, and make sure you remain at your qualifying job until your loans have been forgiven.
And whatever the outcome of your PSLF application, please contact us — we’d love to hear about your experience.
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