What Is Public Service Loan Forgiveness (PSLF)? | Learn.org

Public service loan forgiveness is a U.S. federal program that forgives the remaining balance on direct loans of full-time employees of eligible employers. Besides working full-time for an eligible employer, you must make at least 120 qualifying monthly payments to an accepted repayment plan.

Public service loan forgiveness can be a great option for eligible workers to remove the stress of repaying their federal student loans. Continue reading to learn more about Public Service Loan Forgiveness eligibility and how this program works.

Public Service Loan Forgiveness (PSLF): What Is It?

The Public Service Loan Forgiveness (PSLF) program is a federal student aid program that benefits workers in public service roles to pay their student loan debt. It's important to understand the program's requirements, employee eligibility, and which loans can qualify.

Types of Loans Eligible for PSLF

The only loans covered under PSLF are those received under the Direct Loans Program. Types of direct loans include:

• Direct Unsubsidized Loans
• Direct PLUS Loans
• Direct Consolidation Loans

Loans received under the Federal Family Education Loan (FFEL) Program or Federal Perkins Loan (Perkins Loan) do not qualify for public service loan forgiveness. However, these loans can join through a direct consolidation loan. Once the required 120 qualifying payments are received, the loan is eligible for public service loan forgiveness.

How Public Service Loan Forgiveness Works

Public service employees are eligible for public service loan forgiveness after making 120 qualifying monthly payments to a direct loan. These payments don't need to be consecutive but must be made while working full-time for a qualified employer. You can make payments at any time during the month ?and if you find yourself unemployed, payments made prior won't be erased.

You must also make these payments under an eligible repayment program. Two qualifying repayment programs are income-driven repayment plans and the standard repayment plan. Under the income-driven repayment plan, your monthly payment will be based on your income and family size.

The standard repayment plan is a basic repayment plan that sets fixed monthly payments for up to 10 years. This plan is standard for repaying the William D. Ford Federal Direct Loan Program and Federal Family Education Loan (FFEL) Program.

What Jobs Qualify for PSLF?

The jobs that qualify for public service loan forgiveness are public sector jobs, such as those in the government, healthcare, education, military, and more. Some jobs that are eligible for public service loan forgiveness include:

• teachers
• doctors
• nurses
• EMTs
• government officials

These jobs are necessary for society to function and provide immeasurable value to the local community. Higher education is expensive, so getting help through the PSLF program is beneficial for public service personnel.

Benefits of Public Service Loan Forgiveness

There are numerous benefits of the Public Service Loan Forgiveness Program. Some of the most substantial benefits for public service sector employees include:

• student loan forgiveness
• reduced financial stress
• easier to pursue advanced degrees
• employment flexibility

Beyond these benefits is the value added to the community by encouraging people to pursue jobs in the public service sector. Also, the IRS does not consider student loan amounts forgiven by the PSLF program taxable income. Therefore, debt forgiven by the PSLF will not cause you a federal tax liability.

Common Misconceptions About PSLF

Below are some common misconceptions about the PSLF program.

All Public Sector Jobs Qualify for PSLF

Unfortunately, not all public sector jobs are eligible for PSLF. Only qualifying public service roles can receive aid from the PSLF program after meeting specific requirements. Examples of jobs that don't qualify for PSLF include:

• employees of a nonprofit organization that is not tax-exempt under Section 501(c)(3) of the Internal Revenue Code
• employees of for-profit organizations
• labor union employees
• employees of partisan political organizations

All Student Loans Are Eligible for PSLF

Not all student loans are eligible for PSLF. This program only forgives remaining balances on direct loans after the required number of qualifying monthly payments are met. Ensure your student loan is a direct loan. If it isn't, consider consolidating the loan into a direct loan and start making payments until you are eligible for PSLF.

All Repayment Plans Count Toward PSLF

Not all repayment plans count toward PSLF. Qualifying repayment plans for PSLF include income-driven repayment (IDR) plans or the 10-year Standard Repayment Plan. Examples of qualifying income-driven repayment (IDR) plans include:

• Saving on a Valuable Education SAVE Plan
• Pay As You Earn PAYE Plan
• Income-Based Repayment IBR Plan
• Income-Contingent Repayment ICR Plan

The Standard Repayment Plan for Direct Consolidation Loans differs from the 10-year Standard Repayment Plan and does not qualify for PSLF. Ensure your student loan payments are made under a qualifying repayment plan.

You Can Get Forgiveness After 10 Years of Work

Public service sector employees are not eligible simply for completing 10 years of work. To be eligible, employees must also meet several requirements, including the 10 years of qualifying monthly payments, which comes to 120 payments.

PSLF Forgives All Loan Balances

PSLF only forgives the remaining balance on direct loans after 120 qualifying monthly payments have been made. Not all loans qualify for PSLF, and the program does not cover more than the remaining balance after 10 years of qualifying payments.

How To Apply for PSLF

To apply for the Public Service Loan Forgiveness Program, you must complete the PSLF form. The full name of this form is the Public Service Loan Forgiveness (PSLF) & Temporary Expanded PSLF (TEPSLF) Certification & Application. You must also complete this application form annually or when you change employers.

You can use the PSLF help tool to complete your form. Ensure you meet PSLF eligibility standards before applying.

FAQs About PSLF

Here are some frequently asked questions about the Public Service Loan Forgiveness Program.

Does Full-Time Volunteer Service for a Qualifying Employer Count Toward PSLF?

The only full-time volunteer service that counts toward PSLF is AmeriCorps or Peace Corps volunteer service. No other full-time volunteer service is eligible to be counted toward PSLF.

How Many Qualifying Payments Are Required for Public Service Loan Forgiveness?

Ten years' worth of qualifying payments to an eligible repayment plan is required for public service loan forgiveness ?this is about 120 qualifying monthly payments. However, not all repayment plans qualify for PSLF, so ensure your plan is eligible.

How Does the Public Service Loan Forgiveness Program Work for Military Service Members?

Full-time active military service members are eligible for PSLF as qualifying public service employees. However, you must still ensure you borrow from the correct type of student loan and are making payments to a qualifying repayment plan. If you're unsure whether you qualify for PSLF, you can fill out the Employment Certification Form.