What is the Public Service Loan Forgiveness Program (PSLF)?
In 2007, Congress created the Public Service Loan Forgiveness Program to encourage individuals to enter and continue to work full time in public service jobs.
Under a traditional payment plan, the borrower makes payments for up to 10 years to pay the principal and interest accrued on his or her student loan(s).
Under the PSLF program, eligible borrowers (must be employed full time by certain public service employers) may make 120 reduced payments under the IBR (Income Based Repayment Plan) or ICR (Income Contingent Repayment Plan). At the end of the 10 year period, any unpaid principal or interest will be forgiven.
What federal student loans are eligible for forgiveness under the PSLF Program?
Any non-defaulted loan made under the William D. Ford Federal Direct Loan Program (Direct Loan Program) is eligible for loan forgiveness. (See below for information on how non-Direct Loans may be eligible.) The Direct Loan Program includes the following loans:
- Federal Direct Stafford Loans (Direct Subsidized Loans)
- Federal Direct Unsubsidized Stafford Loans (Direct Unsubsidized Loans)
- Federal Direct PLUS Loans (Direct PLUS Loans) for parents and graduate or professional students
- Federal Direct Consolidation Loans (Direct Consolidation Loans)
NOTE: To qualify for forgiveness of a parent PLUS Loan you, the parent borrower, not the student on whose behalf you obtained the loan, must be employed by a public service organization.
How can other federal student loans become eligible for loan forgiveness under the PSLF Program?
Although loan forgiveness under this program is available only for loans made and repaid under the Direct Loan Program, loans made under other federal student loan programs may become eligible for forgiveness if they are consolidated into a Direct Consolidation Loan. However, only payments made on the Direct Consolidation Loan will count toward the required 120 monthly payments.
The following loans may be consolidated into the Direct Loan Program:
- Federal Family Education Loan (FFEL) Program loans, which include Subsidized Stafford Loans
- Unsubsidized Stafford Loans
- Federal PLUS Loans for parents and graduate or professional students
- Federal Consolidation Loans (excluding joint spousal consolidation loans)
- Federal Perkins Loans
- Certain Health Professions and Nursing Loans
NOTE: To consolidate a Federal Perkins Loan into the Direct Loan Program, you must also consolidate at least one FFEL Program Loan or Direct Loan. If you are unsure about what kind of loans you have, you can find information about your federal student loans in the U.S. Department of Education's National Student Loan Data System at www.nslds.ed.gov.
WARNING - if you consolidate Perkins Loans, you will lose the benefits associated with those loans, such as the 5% fixed interest rate and loan cancellation benefits for graduates working in criminal justice, health or education professions. Click here for more information regarding Perkins Loan cancellation.
What are the borrower eligibility requirements for loan forgiveness under the PSLF Program?
- You must not be in default on the loans for which forgiveness is requested.
- You must be employed full time by a public service organization
- when making each of the required 120 monthly loan payments (certain repayment conditions apply see below);
- at the time you apply for loan forgiveness; and
- at the time the remaining balance on your eligible loans is forgiven.
What are the specific loan repayment requirements for loan forgiveness under the PSLF Program?
You must have made 120 separate monthly payments after October 1, 2007, on the Direct Loan Program loans for which forgiveness is requested. Earlier payments do not count toward meeting this requirement. Each of the 120 monthly payments must be made for the full scheduled installment amount within 15 days of the due date.
The 120 required payments must be made under one or more of the following Direct Loan Program repayment plans:
- Income Based Repayment (IBR) Plan
- Income Contingent Repayment (ICR) Plan
- Standard Repayment Plan with a 10-year repayment period
- Any other Direct Loan Program repayment plan; but only payments that are at least equal to the monthly payment amount that would have been required under the Standard Repayment Plan with a 10-year repayment period may be counted toward the required 120 payments
For more information about the repayment plans available in the Direct Loan program, please visit http://www.direct.ed.gov/RepayCalc/dlindex2.html
IMPORTANT NOTE: The PSLF Program provides for forgiveness of the remaining balance of a borrower’s eligible loans after the borrower has made 120 qualifying payments on those loans. In general, only borrowers who are making reduced monthly payments through the Direct Loan Income Contingent or Income Based repayment plans will have a remaining balance after making 120 payments on a loan.
NOTE TO PLUS LOAN BORROWERS:
A Parent PLUS borrowers eligibility for PSLF is based on the parents qualifying public service employment, not on the employment of the dependent student on whose behalf the parent borrowed. Secondly, to qualify for PSLF, the parent borrower must consolidate Parent PLUS Loans into a Direct Consolidation Loan. Direct Consolidation Loans that repaid parent PLUS loans may be repaid under the ICR Plan.
What types of public service jobs will qualify a borrower for loan forgiveness under the PSLF Program?
You must be employed full time (in any position) by a public service organization, or must be serving in a full-time AmeriCorps or Peace Corps position. Organizations that meet the definition of "public service organization" for purposes of the PSLF Program are listed below.
- A government organization (including a federal, state, local, or tribal organization, agency, or entity; a public child or family service agency; or a tribal college or university); a non-profit, tax-exempt organization under section 501(c)(3) of the Internal Revenue Code (includes most not-for-profit private schools, colleges, and universities);
- A private, non-profit organization (that is not a labor union or a partisan political
organization) that provides one or more of the following public services:
- Emergency management
- Military service
- Public safety
- Law enforcement
- Public interest law services
- Early childhood education (including licensed or regulated health care, Head Start, and state-funded pre-kindergarten)
- Public service for individuals with disabilities and the elderly
- Public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in health care practitioner occupations and health care support occupations)
- Public education
- Public library services
- School library or other school-based service
NOTE: When determining full-time public service employment at a not-for-profit organization, you may not include time spent participating in religious instruction, worship services, or any form of proselytizing.
How can I keep track of my eligibility?
For detailed information about the PSLF program, including how to monitor your progress toward qualifying for PSLF, review the PSLF Questions and Answers document at http://www.studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/public-service or contact your Direct Loan servicer.
How do I apply for this program?
To apply for Public Service Loan Forgiveness, you must print and complete the borrower section of an application, have your employer's Human Resources Office complete the Employer Certification Form, and submit it to FedLoan Servicing.
If you are eligible for the PSLF program, your loan will be transferred from your current loan servicer to FedLoan Servicing. FedLoan Servicing will then track any eligible payments you have made to date as well as future payments.
Please visit the FedLoan Servicing website for complete details and to print an application:http://www.myfedloan.org/manage-account/loan-forgiveness-discharge-programs/loan-forgiveness.shtml