Public Service Loan Forgiveness | Latest Updates

Public Service Loan Forgiveness is easy to obtain depending on how you go about it. However, it does require you to follow very strict rules to get your loans forgiven but, the result can be incredibly rewarding at the end of the day. Let’s guide you through it!

Public Service Loan Forgiveness

About Public Service Loan Forgiveness

Public Service Loan Forgiveness is a federal program aimed at encouraging graduates to pursue relatively low-paid occupations such as firefighting, teaching, government, nursing, public interest law, and the military.

Once applying for tax-free compensation, you have to make payments worth 10 years when working for the government or a non-profit organization.

Public Service Loan Forgiveness began in 2007, meaning the first batch of borrowers became eligible for relief in 2017.

But less than 1% of borrowers who have applied for PSLF have had their loans discharged as of June 2019, according to data from the Department of Education. The numbers below are cumulative.

PSLF is worthwhile for students who are preparing to pursue a public service career anyway, says Kristin Bhaumik, an associate director at the University of Michigan’s financial aid office.

How to get Public Service Loan Forgiveness

Most borrowers are denied because they don’t meet the program’s many requirements. However, having your loans forgiven is possible if you follow the program’s rules.

1. Have the Correct Type of Loans, or Consolidate

Only loans that are part of the federal Direct Loan Program are eligible for PSLF. Private student loans aren’t eligible. The progress you’ve made toward forgiveness will be erased when you consolidate.

You can consolidate other types of federal student loans, Federal Family Education Loan loans or Perkins loans, to make them PSLF-eligible. Do this as soon as possible, because any progress made toward forgiveness will be erased when you consolidate.

If you qualify for Perkins loan cancellation, which offers forgiveness after five years of public service, pursue that option and don’t consolidate your Perkins loans. You can still participate in PSLF with your other federal student loans.

2. Work Full-Time for a Qualifying Employer

Eligibility in the program depends less on the type of work you do and more on who your employer is. Qualifying employers include:

  • Government organizations at any level.
  • 501(c)(3) nonprofits.
  • AmeriCorps or the Peace Corps.
  • Nonprofit organizations that don’t have 501(c)(3) status but provide a qualifying public service as their primary purpose.

Complete an employment certification form to confirm that your employer qualifies. Send the form to FedLoan Servicing, the contractor that oversees PSLF for the department.

When the form is processed, your loans will be transferred to FedLoan to be serviced going forward.

Submit a new form annually, or whenever you change jobs, to make sure you’re on track for forgiveness. You’re not required to submit the form every year, but it’s a good idea to do so for your records.

You can also apply for forgiveness once you’re eligible and certify your employment retroactively.

You must work for your qualifying employer full-time, which amounts to at least 30 hours per week. If you work part-time for two qualifying employers and your time averages at least 30 hours per week, you might still be eligible.

3. Switch to Income-Driven Repayment

To count toward PSLF, your payments must be made on the standard 10-year plan or on one of the four income-driven repayment plans. You’ll save the most money if you make all qualifying payments on an income-driven plan.

You’ll save the most money if you make all qualifying payments on an income-driven plan. If you make all payments on the standard plan, you’ll pay off the debt by the time you’ve made enough payments to qualify for PSLF.

Payments made on the graduated or extended federal repayment plans don’t typically count toward PSLF.

But under the Temporary Expanded Public Service Loan Forgiveness Program, which the Trump administration rolled out in March 2018, payments made on those plans may still qualify.

Public Service Loan Forgiveness

4. Make 10 Years’ Worth of Payments

You must make 120 monthly loan payments. These payments must be made:

  • For the full amount due.
  • On time, meaning within 15 days of your due date.
  • On or after Oct. 1, 2007.
  • While you’re working full time for a qualifying employer and on a qualifying repayment plan.

Each qualifying payment must be a required payment, meaning extra payments don’t count.

Payments also don’t count if they’re made while you’re in school, in deferment or forbearance, during a grace period, or if your loans are delinquent or in default.

The payments do not need to be consecutive. For example, you could make some qualifying payments, pause payments through forbearance, and then resume repayment, picking up where you left off.

You can also change jobs, switching between qualifying employers and nonqualifying employers. However, payments only count toward PSLF when you’re working for a qualifying employer.

5. Apply for Forgiveness

Once you’ve met all of the above requirements, submit the Public Service Loan Forgiveness application. You must be working full-time for a qualifying employer when you apply.

Along with the application, you’ll need to submit an employment certification form for your current employer and each employer you had while making the 120 payments.

If you’ve been completing these forms regularly, you’ll need to submit only one for your current employer.

FedLoan Servicing will notify you when it receives your paperwork. You aren’t required to make loan payments while it processes your application.

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Applying for Public Service Loan Forgiveness: 5 Tips for Success

Applying for Public Service Loan Forgiveness: 5 Tips for Success

1. Understand the Requirements

There are several requirements you must meet to move toward your goal of receiving public service loan forgiveness.

Before you plan on receiving PSLF, read all the requirements carefully to make sure you are eligible under each category (employer, loan type, repayment plan, and qualifying payments).

2. Check Other Factors that Impact Your PSLF Eligibility

Be aware that even though you may be working for a qualifying employer, other factors such as your salary, family size, and loan balance can impact your progress toward PSLF.

For example, Nancy and Ben have the same employer but that doesn’t mean they both qualify for PSLF. Their different incomes and loan balances impact the amount eligible for forgiveness.

3. Submit Your Employment Certification Form Yearly

The best way to validate if you’re on track for PSLF is by submitting an Employment Certification Form (ECF) every year or when you change employers.

The information you provide on the ECF determines if you are on the right track for forgiveness. If you’re not fulfilling a qualification for PSLF, further details will be provided in a response letter.

4. Be Aware of the PSLF and ECF Process

After you make your 120th qualifying monthly payment, you will need to submit the PSLF application to receive loan forgiveness. You will not automatically receive PSLF after you’ve made 120 qualifying monthly payments.

If you leave your job at a qualifying employer after meeting the PSLF eligibility requirements but before you apply for loan forgiveness, you will not be eligible for forgiveness since you must be working for a qualifying employer at the time you apply for and receive forgiveness.

However, you could regain eligibility if you later find full-time employment at another qualifying employer and then apply for loan forgiveness.

5. Save and Archive Your Documentation

In case there are any discrepancies during the PSLF process, you’ll want to save all of your paperwork and communication related to your PSLF journey.

Things such as copies of your Employment Certification Form, response letters from FedLoan Servicing, and employment documentation should be kept in a safe place.

Don’t Qualify for PSLF? You Have Other Options

You’re not alone if you don’t meet PSLF’s strict requirements. You also have other options:

  • Explore other paths to forgiveness. PSLF isn’t the only federal student loan forgiveness program, although it’s one of the most popular. However, watch out for loan forgiveness scams.
  • If your application for Public Service Loan Forgiveness (PSLF) was denied, you may be able to receive loan forgiveness under the Temporary Expanded Public Service Loan Forgiveness (TEPSLF) opportunity. As part of this opportunity, the Department of Education reconsiders your eligibility using an expanded list of qualifying repayment plans.
  • Stay on income-driven repayment. All four income-driven plans will forgive your remaining balance after 20 or 25 years, depending on the plan. However, unlike with PSLF, the forgiven amount is taxable.
  • Consider refinancing. Student loan refinancing can save you money and help you become debt-free faster by lowering your interest rate. However, once you refinance federal loans, they’re no longer eligible for forgiveness programs or income-driven repayment. You need stable finances and good credit to qualify.

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Final Thoughts

PSLF is a great program, but it does require you to follow very strict rules to get your loans forgiven. The entire process can be confusing and difficult to navigate.

However, the result can be incredibly rewarding seeing thousands of your student loan debt forgiven. It’s essential that you educate yourself on the process so that you can follow up appropriately.

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