Public Service Loan Forgiveness

What are the terms of Public Service Loan Forgiveness?

Public Service Loan Forgiveness (PSLF) is a program that cancels federal student loans for those who work in qualifying jobs. The PSLF program was created to encourage more people to enter and continue working in public service fields, such as teaching, law enforcement or non-profit management. To qualify for this benefit, you must have an eligible federal direct student loan balance and be employed full-time by a nonprofit organization or government entity while making 120 on-time monthly payments under certain repayment plans. You may also qualify if your employer is not considered tax exempt but provides some type of community service.

The Public Service Loan Forgiveness program is available to those who work in public service and have a qualifying loan.  Qualifying loans are federal student loans, such as Stafford Loans or Direct Loans, that were first disbursed on or after October 1, 2007.

Employers of eligible borrowers must be 501(c)(3) organizations and the borrower's income must be less than 150% of the poverty line (incomes up to $37,650).  The employment period required by law is 10 years with 120 monthly payments made while employed at an eligible employer.

The Public Service Loan Forgiveness program is a federal program that allows borrowers to have their loans forgiven after making 120 payments. To be eligible, you must work at an organization that qualifies as tax-exempt under Section 501(c)(3) of the Internal Revenue Code and your employment must be full time (at least 30 hours per week). You also need to make sure your income is low enough where it doesn't exceed what's allowed by Income-Based Repayment (IBR), Pay As You Earn (PAYE), or other repayment plans. If you meet all these qualifications, then you may qualify for this type of loan forgiveness.

To qualify for Public Service Loan Forgiveness, a student must have been employed in public service since October 1, 2007. In order to be eligible for this program, the borrower must make 120 qualifying payments on their federal student loans while working full-time in public service.  To receive the benefits of this program and not pay any interest on your remaining balance after 10 years of repayment, you need to submit an employment certification form annually with your income documentation before each year's deadline (October 1). If you are unable to meet these requirements because of circumstances beyond your control or if you change jobs from one that qualifies as public service work to another that also qualifies as such work at some point during the 10 years leading up until qualification is achieved (i.e., a job change), then it may still be possible for you to receive Public Service Loan Forgiveness by submitting an Employment Certification Form within 30 days following either event occurring.

An Income-based repayment plan (IBR) is a federal student loan repayment plan that sets the monthly payment for borrowers at an amount that is intended to be affordable based on their income. This type of plan may also offer forgiveness after 20 or 25 years, depending on which version you qualify for. The IBR was created in 2009 as part of the College Cost Reduction and Access Act and it's designed to help students who are struggling with high levels of debt repay their loans more easily by capping payments according to what they can afford each month.

In order to qualify for the Public Service Loan Forgiveness Program, your employer must be a not-for-profit or tax exempt 501(c)(3) organization. You can also qualify by working at least 10 hours per week on an AmeriCorps State and National program.