Public Service Loan Forgiveness: Everything You Need to Know

Many student loan borrowers have received some relief in recent years, as the U.S. Department of Education paused student loan payments and collections on most federal student loans in March 2020 due to the coronavirus pandemic. And while it’s been extended multiple times, that suspension is only temporary.

As of now, student loan repayments will begin again in August, so experts advise current students not to take out loans with the expectation that they will be erased — even with promises from the current administration around some form of debt cancellation.

Eligible borrowers can still receive some permanent relief through federal programs, including Public Service Loan Forgiveness. PSLF, as it’s known, has been in the news quite a bit over the last few years given its high ineligibility rates caused by complicated requirements and miscommunication from loan providers. But the Department of Education has sought to address eligibility barriers and confusion through two recent changes: Temporary Expanded Public Service Loan Forgiveness, or TEPSLF, and the limited PSLF waiver.

“There seems to be some desire to make the process easier and more transparent,” says Stacey MacPhetres, senior director of education finance at Bright Horizons College Coach.

What Is Public Service Loan Forgiveness?

PSLF is a federal program that was introduced in 2007 to incentivize more people to pursue careers in public service by erasing some of their student debt. The program is aimed at helping borrowers who become teachers, nurses or police officers, for example.

But it comes with stipulations.

Borrowers must first make 120 qualifying monthly payments, which takes at least 10 years, while being employed full-time by an eligible employer. Whatever debt is left after that point is supposed to be forgiven. But many borrowers have been stymied by the logistics of the program over the years, and have lost out on forgiveness.

A student loan payment meets requirements for PSLF if it is made after Oct. 1, 2007, under a qualifying repayment plan, no later than 15 days after the due date and for the full monthly amount. Consecutive payments are not required and paying more per month does not reduce the time it takes to earn loan forgiveness.

[See: How Average Student Loan Debt Has Changed in 10 Years.]

To participate, you must be employed by a federal, state, local or tribal government organization, including the U.S. military; a nonprofit organization that is tax-exempt under Section 501(c)(3) of the Internal Revenue Code; or be a full-time AmeriCorps or Peace Corps volunteer. Nonprofits without 501(c)(3) status are still considered a qualifying employer if they offer one of the following public services: emergency management, military service, public safety, law enforcement, public interest law services, early childhood education, public service for individuals with disabilities and the elderly, public health, public library services, school library or other school-based services.

Labor unions, partisan political organizations and for-profit organizations, including for-profit government contractors, are not eligible for PSLF. To check to see if your employer meets the qualifications, use the PSLF Help Tool on the Department of Education’s Federal Student Aid website.

There are certain loan and repayment plan requirements as well. Only direct federal student loans qualify, so the Federal Family Education Loan program and the Federal Perkins Loan program are not accepted.

As for repayment plans, there are two options: an income-driven repayment plan or the 10-year standard repayment plan. But given the 10-year timeline with the standard repayment plan, a borrower may have no remaining balance to forgive.

The average balance discharged for borrowers under PSLF — including with TEPSLF and the limited waiver — as of March 31, 2022, was $67,592, according to Department of Education data.

[Read: Understanding the Types of Federal Student Loans Available.]

How to Apply

It’s recommended for a borrower to fill out an employer certification form annually, which requires either a recent W-2 form or federal employer identification number. Not only can the PSLF Help Tool be used to search for qualifying employers, but it can also generate information automatically in the form and provide further clarification around eligibility requirements.

Once an employer is deemed eligible after the form is completed, direct loans are transferred to the PSLF servicer, FedLoan Servicing. Notice is given to the borrower each time the form is submitted about the number of qualifying payments they have made.

If a borrower chooses not to fill out the form each year, they will be required to submit employment certification for every employer they worked for while making the required monthly payments.

Digital signatures — hand drawn, not typed — are needed from both the borrower and the employer. The completed form should be mailed or faxed to FedLoan Servicing (see the full instructions here). If your service provider is FedLoan Servicing, the form can be uploaded directly on their website.

If a borrower is approved and makes more than 120 qualifying payments, those extra payments will be refunded. Processing time once approved for loan forgiveness varies, but could take up to several months, during which the borrower must remain at a qualifying employer.

“It’s troubling because you have to be employed at a qualifying employer both when you applied for forgiveness as well as when the forgiveness is granted,” says Jill Desjean, senior policy analyst with the National Association of Student Financial Aid Administrators.

Changes to PSLF

The program has faced criticism, and recently investigations, for its high ineligibility rates. The first round of applications for PSLF were accepted and reviewed in 2017, and by June 2018, 99% of applicants had been rejected. This was often for minor details such as incomplete paperwork.

To reduce program barriers, TEPSLF was created in 2018 to extend relief to borrowers of direct student loans who made some or all of their on-time, monthly payments in the wrong repayment plan. But with continued confusion on eligibility requirements and little funding distributed, and due to the ongoing coronavirus pandemic, the Department of Education announced the establishment of the limited PSLF waiver Oct. 6, 2021.

Until Oct. 31, 2022, any prior period of repayment will qualify for PSLF, regardless of the loan program or repayment plan type. But for repayment to be valid, all non-direct federal student loans, like Federal Perkins Loans or FFEL program loans, have to be consolidated into the direct loan program before the limited waiver deadline. An individual’s period of service that led to eligibility for Teacher Loan Forgiveness now can also be used toward PSLF.

More than 113,000 borrowers have qualified for forgiveness under the PSLF limited waiver as of early April 2022, according to Department of Education data.

[Read: How Student Loan Debt Is Different From Other Types of Debt.]

Additionally, this time in pandemic forbearance still counts toward the 120 qualified monthly payments — only if direct loans are not in default and the borrower is still employed full-time for an eligible employer — even though no payments are occurring.

PSLF Assistance

Given the complicated nature of the PSLF program, borrowers may be left with questions. Refer to the FSA website to learn more about eligibility requirements or contact FedLoan Servicing.

Experts also suggest reaching out to your student loan servicer for more tailored assistance.

“Your situation may be different than your roommate’s or somebody down the hall,” says Joseph Orsolini, president of College Aid Planners Inc. “Your loan service providers are going to have all the details to your specific situation.”

Trying to fund your education? Get tips and more in the U.S. News Paying for College center.

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