The Five “Qs” of Public Service Loan Forgiveness

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#StudentLoanForgiveness. It’s a hashtag now, so you’ll all pay attention, right? Everyone wants their student loans forgiven. The perception is that very few qualify for any forgiveness programs. But did you know that there is one broad, employment-based forgiveness program for federal student loans? Most people don’t, or misunderstand how it works. Let me break down some key points of the Public Service Loan Forgiveness Program to help you figure out if you could qualify.

Can you check the all the boxes?

[ 1 ] Work in “Qualifying Employment”

First, you need to work in “qualifying” employment; that is, you must work in “public service.” But what does that mean? Everyone seems to have a different definition. Ours is based on who employs you, not what you do for your employer. The following types of employers qualify:

  • Governmental organizations – Federal, state, local, Tribal
  • Not-for-profit organization that is tax-exempt under Section 501(c)(3) of the Internal Revenue Code
  • A not-for-profit organization that provides some specific public services, such as public education, law enforcement, public health, or legal services

The following types of employers do not qualify:

  • Labor unions
  • Partisan political organizations
  • For-profit organizations

[ 2 ] “Qualifying Employment Status”

If you work at one of these types of organizations—great! That’s the most difficult criteria to meet. Next, you need to work there in a “qualifying” employment status, which means that you must be a full-time employee of the organization. Full time, for our purposes, generally means that you meet your employer’s definition of full time or work at least 30 hours per week, whichever is greater.

[ 3 ] Have a “Qualifying Loan”

A “qualifying” loan is a Direct Loan. It’s that simple. Of course, it’s the government, so nothing is actually that simple. You see, there are (or were) three big federal student loan programs:

  • The Direct Loan Program, which is now the biggest program,
  • The Federal Family Education Loan (FFEL) Program, which is what many students borrowed from until mid-2010, and
  • The Federal Perkins Loan Program, which is a relatively small program.

You may have loans from just one of these programs, or you may have borrowed from all three. If you’re not sure which loan program you borrowed from, I can’t blame you—I had 20 separate loans by the time that I finished graduate school! You can use the National Student Loan Data System to determine which program you borrowed from. Here’s a tip from me to you:  basically, if you see “Direct” in the loan type name, it’s a Direct Loan. Otherwise, it’s not.

Don’t have a Direct Loan? Don’t despair! You can consolidate your other federal student loans into a Direct Consolidation Loan and qualify that way. Not having a Direct Loan is the biggest reason that borrowers who are seeking Public Service Loan Forgiveness aren’t on the right track, so be sure that all of your loans that you want forgiven are Direct Loans before you proceed to the next step. If you do need to consolidate, be sure to check the box in the application that says that you’re consolidating for the purposes of loan forgiveness. It will make your life easier, I promise.

[ 4 ] Have a “Qualifying Repayment Plan”

Next, you need a “qualifying” repayment plan. All of the “income-driven repayment plans” are qualifying plans for Public Service Loan Forgiveness. So is the 10-year Standard Repayment Plan, but if you’re on that repayment plan, you should switch to an income-driven repayment plan straight away, or you will have a drastically lower loan balance left to be forgiven after you meet all of the criteria.

If you’re consolidating your loans, you can apply for an income-driven repayment plan in the consolidation application, but if you don’t, you will be placed on the Standard Repayment Plan for Direct Consolidation Loans, which is almost never a qualifying repayment plan for Public Service Loan Forgiveness. If you already have Direct Loans, you can submit an income-driven repayment plan application on StudentLoans.gov.

[ 5 ] Make 120 “Qualifying Payments”

Lastly, you need to make “qualifying” payments—120 of them. A qualifying payment is exactly what you would expect it to be. You get a bill. It has an “amount due” and it has a “due date”. Make the payment in that amount by the due date (or up to 15 days after), and the payment is a “qualifying payment”. If you make a payment when you’re not required to—say, because, you’re in a deferment or you paid your student loan early—then that doesn’t count. But if you reliably make your payment every month for 10 years, you should be okay. The best way to ensure that your payments qualify is to sign up for automatic payments with your loan servicer.

Note that these payments do not need to be consecutive. So, if you had made 10 qualifying payments, and then stop for a period of time (say, you go on a deferment), then start making qualifying payments again, you don’t start over; instead, you pick up where you left off.

And, I’m sorry to have to mention a seemingly arbitrary date, but a payment only qualifies if it was made after October 1, 2007, so nobody can qualify for Public Service Loan Forgiveness until 2017 at the earliest.

Ok, so do I qualify?

Now that you have the details, let me explain how all of the criteria work together. For any payment to count toward Public Service Loan Forgiveness, you need to meet all of the criteria when you make each payment. Stated differently, you need to be working for a qualifying employer on a full-time basis when you make a qualifying payment under a qualifying repayment plan on a Direct Loan. When you break these criteria down separately, it seems simpler. It’s when you try to pack it into one sentence that it seems overwhelming.

As much as I’d like to think that all of you now have a perfect understanding of this program and how it works, I know all of you are thinking—“okay, but do I qualify?” Here’s how you find out. Download this form. Fill it out. Have your employer certify it. Send it to FedLoan Servicing (one of our federal student loan servicers), queue up How I Met Your Mother on Netflix, and wait for an answer. FedLoan Servicing will do the following:

  • Check whether you have any qualifying loans.
  • If you have qualifying loans, validate that your employment qualifies. If none of your loans qualify, they’ll tell you so.
  • If your employment qualifies, they will send you a letter confirming that your employment qualifies. Then, any of your federally held loans that are not serviced by FedLoan Servicing will be transferred to them so that we can keep better track of your loans and payments for Public Service Loan Forgiveness. If your employment doesn’t qualify, they’ll tell you so.
  • After your loans are transferred, they will match up the dates of employment on the form that you submitted to the payments you made during that time and determine how many qualifying payments you made. You’ll receive a letter with a count of qualifying payments and an anticipated forgiveness date (which assumes that all your future payments also qualify).

It’s after you get this payment count back that you’ll know whether you’re on the right track. So, it really is a good idea to submit this form early and often. We recommend that you submit the form once per year or when you change jobs. The beauty of submitting these forms early and on an ongoing basis is that it means that you won’t have to submit 10 years’ worth of them when you ultimately want to apply for forgiveness. It also means that when you apply for forgiveness, that you’ll be able to do so with confidence that you qualify for it.

One more piece of good news: Public Service Loan Forgiveness is not considered income by the IRS. That means that it’s tax-free.

Ian Foss has worked as a program specialist for the Department of Education since 2010. He’s scheduled to be eligible for Public Service Loan Forgiveness on October 6, 2021, if all goes according to plan.

25 Comments

  1. My wife and I are both in our 60’s. I owe 65K or so and my wife owes 45K or so. Her wages are being garnished and i am in a repayment plan. We will never be able ot pay off the amounts, which keep growing. Any suggestions.

  2. Hello,
    Great article.
    Do grad plus loans qualify? Should I merge those grad plus loans with un subsidized fed loans?

    Thanks

  3. I’m 69. I’ve been attending a university Master’s program and receiving tuition assistance only under the Hazelwood Exemption in Texas. I owe about 20k in Direct Loans and Subsidized Loans. I receive Social Security. When I got my loans I was relatively healthy. During the last five years my moderate case of diabetes has increased to a case with some complications. I now take about seven medications including a blood thinner and insulin. I had a stroke last month. I’m in physical therapy and there is some impairment.

    I have been officially declared a 50% disabled American Veteran. I receive a modest monthly allotment of 900.00.

    Is there an agency to which I can apply for assistance in negotiating the system in order to defray, delay or otherwise repay my loans?

    I need help with the paper work.

  4. I have, over the years, paid more than 2x my original loans but due to a period of homelessness, followed by some time in truly abject poverty, and and even longer period of barely scraping by,I still owe more than 2x what I originally borrowed because the interest keeps growing. Now, 20 years later, I cannot work outside the home because I am the sole care provider for my disabled mother….any assistance available for those borrowers to whom life happened?

  5. My son has loans from getting masters in health administration and can’t find a job in that field. He’s wanting to go back to school in the medica field; would he qualify for financial or some kind if forgiveness loans?

    • Medical school loans are direct loans for the most part (I’m currently in medical school). There are also grants and scholarships available, as well as a number of loan forgiveness programs. He may also want to consider the military to help with school. Medical school financial aid deparents are usually very good given that students are walking away with 200-300,000 in debt by graduation at a rate of 6.8% (doubles in approximately 10 years) to work in residencies for 3-7 years at $40-60 thousand a year. They are in tune with the changes in financial aid packages and programs that are offering forgiveness.

  6. My daughter is a teacher. She received her masters in teaching in 2009. I believe she has three different types of loans. Should she submit the form and let them tell her if she qualifies? I believe she has been on the standard repayment plan. Will those previous payments be considered in the 120 payments or does it start from when you apply and consolidate to income driven repayment plan? She also has loans from her undergraduate degree. Would those loans qualify? Also once you are approved are you guaranteed forgiveness after 120 payments? Thanks for you information

  7. Am I a chump for saving up and paying my children’s college bills? Should I have my son take out loans so he can be eligible for debt forgiveness?

    • Definitely not a chump. Loans will still be available to your son even if you are saving up money, and MOST loans from public universities are government direct loans mentioned above. Private universities often have endowments to help provide grants on a merit and/or financial need basis. In addition, I would save money for your son because FASFA requires that students place their parents income and submit it. If you were not saving money and/or not intending to help your son he may or may not qualify for loans based on your income. It’s a little screwy and complicated. I would save money and then when the time comes talk to a financial aid advisor at the institution to get an opinion on what is the best way to pay for school. Who knows- it may all change soon. I’ve been in graduate school for the last three years and every year there has been financial aid changes at both the graduate and undergraduate level.

  8. I have a disable son at home with brain damage he receives SSI. I am working part time to make money to help pay the rent. I cannot take on a full time job because of his disabilities require me to be at home most of the time with him. I am working at a detention center as a LPN. Do I qualify for student loan forgiveness program because I am a nurse working in a law enforcement agency and I have a disable son who needs me at home with him most of the time.

    • IRS started taking money from my SSI checks- I barely get enough to get by. I wish I could work!

  9. I’ve been working for a non-profit or local government since 2003. However, in 2017 I plan to be working in the for profit sector. Do the 120 qualifying payments need to be made during the time of qualifying employment? Or, is there are an amount of time spent working in qualifying employment that would make an individual eligible?

    • HI Lex,

      Each payment you make must be made during a period of qualifying employment. All of your “Qs” have to align for it to be a payment that ultimately counts toward Public Service Loan Forgiveness.

  10. I have a question about the 10 payments. Are the 120 payments per loan or total? I have so many loans that 120 payments have already happened in 5 years. If the 120 payments are not per payment, can we also include the payments we made to loans that have been paid off?

    • Hi Krystelle,

      Public Service is what we call a “loan-based” benefit. This means that you need to make the 120 qualifying payments on each loan that you want forgiven. So, it’s impossible to receive Public Service Loan Forgiveness in less than 10 years. It would also be impossible to include payments on loans that you have paid off.

  11. In response to Educated Risk’s question, sending in the Employment Certification Form permanently transfers all of your PSLF qualifying loans to FedLoans from your previous servicer. Currently, borrowers sending in the Employment Certification Form only learn of this fact after the loans have been transferred.

    As explained by a FedLoans customer service representative, “no [private] loan servicer tracks PSLF or has a PSLF program currently.” The underlying reasons for this situation are likely to be a mystery for the ages…

  12. I am so grateful for this program, especially since I am working towards becoming a teacher and I know loans could haunt me in the years to come.

    I’m currently serving a term with AmeriCorps, so my loans from my undergraduate degree are currently in deferment, I am also on track to get my Segal Education award. With this I have two questions though:
    First, the time I spend serving, does this count as public service employment? And if so, what paperwork do I need to complete?
    Second, is about how I should use my award. Should I pay the year amount when I receive it or should I make monthly payments out of it?

    • Hi Azure,

      Great question. Service in AmeriCorps is qualifying service for Public Service Loan Forgiveness. We have even made an exception for those who are in AmeriCorps (and Peace Corps) so that, if they use their Segal Education Award (or, for Peace Corps members, their transition payment) toward their qualifying federal student loans, they will also be deemed to have made up to 12 qualifying payments. You would also have the option of foregoing a deferment or forbearance during your service in AmeriCorps (or Peace Corps), entering an income-driven repayment plan, and making low (or even $0 “payments”) and make qualifying payments that way.

      You would submit the same paperwork as any other borrower, so be sure to check out the form that I linked to in the blog post.

      If you use your Segal Education Award to make PSLF-qualifying payments, tell your loan servicer that your payment is not intended to cover future installments, or it may affect your ability to make qualifying payments in the future. You may submit the form either before or after making the lump sum payment, but we recommend submitting it just after your Segal Education Award is applied to your account. When you submit the form, it may help to include a record of the date and amount of your Segal Education Award payment, the date and amount of your PSLF-qualifying lump sum payment, and a statement that you served in the AmeriCorps and intend for your lump sum payment to count toward PSLF. After you complete this process, FedLoan Servicing will send you notification that provides the number of qualifying payments you’ve made.

      I hope this helps!

  13. My daughter has been out of college for six years. She incurred debt for student loans while in college. She has been unable to secure employment that will allow her to repay the loans. She is also on Social Security Disability. Her income in 2013 was less than $11000. She has contacted an organization that offers her assistance with further deferring and perhaps having the debts forgiven after 20 years. The charge for their services is $699 this year and $350 every year thereafter for 20 years. I am wondering if she can embark on this program without the services of this organization. Please advise us if this is possible.

    • Bill, Don’t do it, it’s a waste of money. Look around on the Department of Education and Social Security Websites. My wife went out on permanent Disability through SSDI (Social Security). Her 17k in student loans are temp forgiven for so many years. As long as she can’t work they get written off in 5 years. save you money and do your homework, good luck

    • Hi Bill,

      The Department of Education offers a Total and Permanent Disability discharge that your daughter may be eligible for. It is one of the benefits associated with federal student loans. Depending on her circumstances, and if she qualifies for a discharge, her loans will be discharged, but her income will be monitored for 3 years to ensure that she not working on earning only a minimal amount of money (we’re talking about income earned from work, not social security benefits here).

      Note that there is never a charge associated with accessing a benefit of a federal student loan. So, there is no need to pay a third-party to access benefits that are available for free. Our contractor, Nelnet, administers the Total and Permanent Disability discharge process. You could help your daughter get the ball rolling by visiting http://www.disabilitydischarge.com.

      I hope this helps.

  14. Great summary of PSLF. It great to get a perspective

    Does FedLoans handle all of the Employment Certification Forms? Even for people with different federal loan servicers?

    Will people with other loan servicers get a letter from FedLoans or their own loan servicer with the number of qualified months if they submit through the FedLoans system?

    Thanks again for this useful summary!

    • Hi Educated Risk,

      Great question. All borrowers should submit the Employment Certification Form to FedLoan Servicing even if their loans are currently serviced by another servicer. The form, itself, instructs borrowers to submit the forms to FedLoan Servicing. If a borrower has qualifying loans and qualifying employment, their loans will be transferred to FedLoan Servicing for the remainder of their repayment term, and it’s after the loans have been transferred to FedLoan Servicing that the borrower will receive a “count” or “audit” of the number of qualifying payments that have been made.

      I hope this helps!

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