With all the loan forgiveness talk and changes over the last few years, things can get confusing. If you work in the public service sector, you may be wondering about the Public Service Loan Forgiveness (PSLF) Program and if it’s still active.
What is it? How do you know if you qualify? And how do you apply?
Keep reading for our breakdown of the latest updates on PSLF and to find out if you qualify!
What is Public Student Loan Forgiveness?
PSLF is a federal program intended to provide debt relief to teachers, nurses, firefighters, military members, and others working for governmental or nonprofit employers.
Qualifying employees can receive tax-free student debt relief after making 10 years’ worth of payments (or a total of 120 payments) while working for an eligible employer.
Who is Eligible for Public Service Loan Forgiveness?
While the Education Department (ED) will implement many permanent changes to the PSLF program starting this July, many of the current requirements will remain. Below are the essentials.
Eligible Loan Types
First and foremost, PSLF only applies to Federal Direct Loans, not private student loans.
You can consolidate most other federal loans (like Federal Family Education or Perkins loans) into a Direct Consolidation Loan to qualify for PSLF. However, don’t do this if you qualify for Perkins loan cancellation, which forgives debt after five years of public service. You can still apply for PSLF with your other federal student loans.
You must work for a qualifying employer full-time, which is generally defined as at least 30 hours per week. Those working more than one qualifying part-time job simultaneously will be considered full-time if they average a combined 30 hours per week.
Eligible employers include:
- Government agencies at any level (i.e., federal, state, local, or tribal), including the military
- 501(c)(3) organizations
- AmeriCorps or the Peace Corps
- Not-for-profit organizations without 501(c)(3) status that provide qualifying public services
- Religious organizations
You can use the employer search tool to confirm that your employer qualifies for PSLF. Then, just complete and submit an employment certification form to MOHELA Servicing, which oversees the PSLF program and will service your loans from now on.
While not required, you should submit a new form yearly or when you start a new job to ensure your records are updated. Or, you can apply for PSLF once you’re eligible and certify your employment retroactively.
To qualify for PSLF, you must have made 120 payments:
- After October 1, 2007
- Under an income-driven repayment (IDR) plan
- For the full amount due
- Within 15 days of your due date
- While employed full-time for a qualifying employer
- Do not count if made while you are in school, during a grace period, in deferment, or in forbearance
- Do not have to be consecutive (e.g., you pause while in forbearance or change jobs from an eligible to an ineligible employer)
- Can be early or lump-sum to apply to future months (e.g., If your monthly payment is $100, and you pay $600, it covers 6 months of payments.)
Additionally, the government put all federal student loans into forbearance and payments are not due again until as late as summer 2023. If you have a Direct Loan and have worked for a qualifying employer during the COVID-19 forbearance, you’ll receive credit as if you made on-time monthly payments in the correct amount while on a qualifying repayment plan.
Before applying for PSLF, you must:
- Meet all the above qualifications
- Be working for an eligible employer when you apply and when your loan is forgiven
- Submit an employment certification form for your current employer (and all others you had while making the 120 payments if you haven’t submitted the form regularly)
You’ll receive a notification from MOHELA once it receives your application. You do not need to make loan payments while your application is being processed.
What is the PSLF Limited Waiver?
The initial limited waiver expired on October 31, 2022, but a similar IDR waiver extends most of the provisions until May 1, 2023. These temporary rules allow borrowers to count any payment toward federal loans toward PSLF—not strictly IDR plans. This includes payments:
- On Federal Family Education Loans or Perkins loans after 2007
- Previously rejected because they weren’t considered on time
- Made prior to consolidation on non-Direct Loans you consolidated before the limited waiver period
The ED will also be reviewing previously rejected PSLF applications. Those who are now eligible for PSLF and haven’t yet applied will also receive notification of the temporary adjustments.
Qualifying borrowers are those who:
- Have Direct Loans (If this is you, you’re all set—simply verify your employer’s eligibility and submit a PSLF form through your loan servicer by May 1, 2023!)
- Previously consolidated into a Direct Loan
- Consolidate into a Direct Loan by May 1, 2023
- Have Grad PLUS loans
- Have Parent PLUS loans
Those with FFEL or Perkins loans must consolidate into a Direct Loan, verify their employer is qualified, and complete a PSLF application by May 1, 2023.
What Permanent PSLF Changes Can We Expect?
Starting on July 1, 2023, the ED will implement many updates to the PSLF program. One highlight is that borrowers who meet public service employment qualifications can get credit for:
- Late, partial, and lump-sum payments
- Months spent in certain types of deferment or forbearance (e.g., military service, economic hardship, or cancer treatment)
Additionally, the new rules will include simplified criteria making it easier for borrowers and their employers to certify employment, such as a single standard of full-time employment at 30 hours a week.
Learn more on the PSLF fact sheet.
While the PSLF has historically been convoluted, things are looking up for public service workers with federal loans. Between streamlined processes and requirements, the program will hopefully work as it was originally intended—helping those in meaningful and critical, yet often low-paying, careers.
The information on this website, including its newsletters, is not, nor is it intended to be legal advice. You should contact an attorney or HR specialist for advice on your individual situation.