The Biden Administration recently announced that it has forgiven a total of $116 billion in federal student loan debt since taking office, including $45 billion through the Public Service Loan Forgiveness program. The program got off to a rocky start once people started becoming eligible several years ago, but the Biden Administration has taken steps to make it easier and more straightforward for borrowers who have completed the work requirements to get their loan balances wiped clean.
If you're a public service employee (or not sure if you are) and are wondering if you're eligible for the Public Service Loan Forgiveness (PSLF) program and when you could potentially see forgiveness, here's a rundown of who qualifies and the important steps you need to take.
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Who exactly qualifies for Public Service Loan Forgiveness?
The idea behind the Public Service Loan Forgiveness program is quite simple. People who work for a qualified public service employer can get any remaining loan balance forgiven on their federal student loans after making 120 qualifying monthly payments.
First, what is a qualifying employer? To be eligible for PSLF, you must be employed by a government agency (federal, state, local, or tribal) or a qualifying not-for-profit organization. A not-for-profit organization counts if they are tax-exempt under Section 501(c)(3) of the Internal Revenue Code and/or whose primary function is to provide certain services, including but not limited to the following:
- Emergency management.
- Law enforcement.
- Public safety.
- Early childhood education.
- Disability services.
- Public health services.
- Public education.
- School-based services.
- Public services for the elderly.
Note that for-profit employers don't count, even if they provide any of the public services listed here. In addition, you must meet a few other requirements:
- You must work full-time in qualifying employment. Part-time employment doesn't count.
- You need to have Direct Loans or consolidate other types of federal loans (such as FFEL and Perkins loans) into a Direct Loan.
- You must participate in an income-driven repayment (IDR) plan or standard repayment plan.
Important things you need to do
In order to qualify for Public Service Loan Forgiveness, there are two main things you need to do, assuming you are in qualifying employment. First, you have to submit paperwork that determines your employer's eligibility and informs the Department of Education of the dates you worked. And you also need to make sure that your loans are enrolled in a qualifying repayment plan, preferably one that makes your required monthly payments as low as possible (after all, you want to keep your out-of-pocket costs low if your balance will eventually be forgiven).
Get your paperwork in order
You don't have to submit any paperwork until you're ready to apply for forgiveness, but the Department of Education recommends submitting the PSLF form every year through the Federal Student Aid portal.
It's in your best interest to do so. The purpose of the form is to verify that you're working in eligible employment. If you don't do these until the end, you will have to track down contact information for your supervisors all at once. It's fair to assume that many people reading this might have trouble contacting someone they worked for 10 years ago, so doing the paperwork as you go can save you hassles later. Plus, you'll know right away whether or not your employer qualifies.
Enroll in the SAVE Plan
Another thing you need to do if you might be eligible for PSLF is to enroll in an income-driven repayment plan. Technically, the standard payment plan is eligible, but with a 10-year repayment plan, you'd have your student loans paid off before you became eligible.
For virtually all borrowers, the new SAVE Plan that the Biden Administration just rolled out is the most beneficial. Not only does it make payments lower for most borrowers, but if your required monthly payment doesn't cover the interest that accumulates, it will not be added to your balance.
PSLF can help save you thousands
The PSFL program can save you a ton of money on student loan repayment, especially if you are a low- to moderate-income employee and your required monthly payments under an income-driven repayment plan are low. If you think your employer qualifies, it's a smart idea to go ahead and fill out the PSLF certification forms for all your qualifying employment.
