The Public Service Loan Forgiveness (PSLF) program1 was created by the US government as part of the College Cost Reduction and Access Act of 2007 and offers a path to forgiveness for federal student loan borrowers working full-time for the government or a qualifying nonprofit organization.
This program is only available to federal student loan borrowers (it’s important to note that the PSLF program is not available for private student loans). Federal Student Aid began accepting and reviewing applications to the program in 2017. Since then, $14.9 billion of student loan debt has been discharged through the program (as of October 2022), according to the Education Department (ED).
Additionally, the rules and requirements for PSLF have changed multiple times since the program’s inception, especially in recent years with expansions and provisions to help more public sector professionals — such as doctors, nurses, first responders, and teachers — in response to the COVID-19 national emergency and beyond.
Read on for a deeper understanding of how the PSLF program works and what types of public sector jobs could qualify. You can also learn more at laurelroad.com/student-loan-forgiveness/.
The 10-year PSLF program allows borrowers employed at government organizations and qualifying nonprofit organizations to have their Federal Direct Loans forgiven after ten years of repayment (or 120 qualifying payments), entirely tax-free. Here’s how it works.
To pursue and qualify for PSLF, 120 qualifying monthly payments must be made under an Income-driven Repayment (IDR) plan, paid on-time (within 15 days of due date) and in the full due amount.
The different types of IDR plans that qualify include:
*Only new enrollments from borrowers of consolidated Parent PLUS loans are being accepted into the ICR plan. No change for current enrollees.
**New enrollments in PAYE are being accepted until further notice, but this plan will eventually be phased out. No changes for current enrollees.
Compare and learn more about the different types of IDR programs here, and note that the following repayment plans do not qualify for PSLF:
If you are currently enrolled in one of these plans, you can switch into one of the IDR plans that does qualify – REPAYE/SAVE, PAYE, IBR, or ICR. Learn more here.
If you’re a borrower with commercially managed FFEL, Perkins, or Health Education Assistance Loan (HEAL) Program loans, be sure to apply for a Direct Consolidation Loan by the end of 2023, to take advantage of this forgiveness opportunity. To learn more, schedule a free call with a GradFin specialist.2
As for job types and titles, qualifying employment for the PSLF Program isn’t so much about the specific job that you do for your employer, it’s more about who your employer is. As a full-time government employee (federal, state, local, or tribal), you’re eligible for PSLF. You could even be eligible for PSLF as a government contractor, so long as you’re directly employed by a qualifying employer — such as a nonprofit — that is doing work under a government contract. Just note that as a contractor, you’re generally considered to work full-time if you work at least 30 hours per week or if you meet your employer’s definition of full-time — whichever is greater.
If you’re employed by a nonprofit, the general rule is that it needs to be tax-exempt under Section 501(c)(3) of the Internal Revenue Code. However, there’s a chance you could be eligible for PSLF even if your organization is not a 501(c)(3) nonprofit. According to studentaid.gov, a nonprofit that is not tax-exempt under section 501(c)(3) could be considered a qualifying employer if it provides certain types of qualifying public services. For example, eligible not-for-profit organizations include most private elementary and secondary schools, private colleges and universities, and many other organizations.
A not-for-profit organization that is not exempt under section 501(c)(3) of the Internal Revenue Code is considered a qualifying employer if it provides at least one of the following public services:
Learn more here.
Common job categories that could qualify for PSLF include:
To better understand your PSLF eligibility, take our quiz below. You can also use the employer search tool on studentaid.gov to see if your current and past employers are on the eligible list.
To further understand of what types of jobs and employers typically do qualify for PSLF, it’s helpful to understand the ones that do not. Here’s a short list:
Learn more about job types, employers, and employment circumstances that do not qualify for PSLF here.
Getting in and staying in the PSLF program a notoriously challenging process with a high rejection rate. According to October 2022 data from ED, only 8.05% of all PSLF and TEPSLF applications have been approved, (233,320 approved for discharge among 2,897,797 total applications).
To pursue and qualify for PSLF, you will need to follow these general steps:
Learn more about applying for PSLF at studentaid.gov/pslf/. For expert guidance through the PSLF application process, schedule a free 30-minute consultation with one of our student loan specialists at GradFin who can help you understand how to qualify, optimize your savings, audit past payments, manage program requirements, and stay on track to forgiveness for the duration of your enrollment in the PSLF program.
If you don’t qualify for PSLF, you still have other options for federal student loan forgiveness through IDR programs, regardless of the outcome of the ongoing litigation around the Biden Administration’s student loan debt relief plan.
Learn more forgiveness through IDR programs at laurelroad.com/income-driven-repayment/ and contact us for a free 30-minute student loan forgiveness consultation. Our student loan specialists at GradFin can help you compare IDR options and determine which program is best for you.
For many working Americans, PSLF is a financial lifeline that significantly eases the burden of student loan debt, making it possible to actualize a successful career in public service.
While expanded eligibility criteria and waivers have helped make PSLF available to more federal student loan borrowers, many public sector professionals still find the constantly changing legislative landscape as well as the paperwork required for the program to be daunting and time-consuming.
If you’re starting the PSLF application process or are unsure about whether your current or past employment qualifies for PSLF, schedule a free consultation with our student loan specialists at GradFin to have your questions answered and learn more about all the forgiveness options available to you.
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To qualify for PSLF, you must be employed by a U.S. federal, state, local, or tribal government or not-for-profit organization (federal service includes U.S. military service); work full-time for that agency or organization; have Direct Loans (or consolidate other federal student loans into a Direct Loan); repay your loans under an income-driven repayment plan; and make 120 qualifying payments. For full program requirements, visit: Federal Student Aid.
GradFin and Laurel Road are brands of KeyBank N.A.
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